After brief cheers, U.S. banks are back to bashing Bitcoin again

Some US banks have restarted their outrage against Bitcoin even as others have warmed up to the asset in the past year.

How prices affect sentiment

Bitcoin’s infamous price gyrations are known to polarize. The asset, like most other cryptocurrencies, can move by several percentage points in a single day—a stomach-churning experience for those using BTC as an “investment” and otherwise used to trading stonks.

Such movements may not affect the average crypto investor with less than $10,000 in overall holdings. However, when that magnitude reaches millions of dollars, it’s either risk-seeking hedge funds or individuals taking the BTC plunge.

Last year, as BTC moved from under $4,000 to over $41,000, banks and financial institutions spoke high and wide of Bitcoin as a one-size-fits-all macro hedge or even as an alternative to gold.

Banks like JPMorgan and Morgan Stanley (despite being known Bitcoin skeptics) said the asset class is likely to attract ‘hundreds of billions of dollars’ in the coming years, asset management firm Fidelity said it expected family offices to eventually start piling Bitcoin, while mutual fund giant MassMutual invested over $100 million in BTC last year, calling it the “first step” towards possible future plans.

But despite the recent cheers, some banks seem to hold their opinion of Bitcoin in tandem with the asset’s price movements: The recent price crash in the past few weeks has seen some banks starting their onslaught against Bitcoin once again.

The FUD returns

A report released by Bank of America last week said Bitcoin remained an overvalued asset and called it the most “crowded trade” in current times. The bank even said Bitcoin was in a bigger “bubble” than most tech stocks—the latter of which have seen their own run last year, with electric carmaker Tesla zooming from under $200 in 2019 to over $800.

Then came a survey commissioned by Deutsche Bank, which saw 90% of respondents say that the most “extreme” bubble was Bitcoin, with 50% of all survey participants giving it the maximum of 10 points on a 1-10 bubble scale.

In terms of a long-term outlook, respondents said both Bitcoin (and stocks like Tesla) were likely to halve in price than double in value. 

Such outlooks came despite an expected 92% higher global inflation over the next year—a record high; one that Bitcoin seeks to hedge against—with 71% of respondents stating the U.S. Federal Reserve was expected to continue to print more money to allow the markets to continue to grow.

The latest of such caution letters came yesterday after UBS economists told clients that Bitcoin wasn’t even an actual currency. “People are unlikely to want to use something as a currency if they’ve got absolutely no certainty about what they can buy with that tomorrow,” said UBS economist Paul Donovan.

But in a world of incessant money printing and inflation, do such arguments even hold a place anymore?

Like what you see? Subscribe for daily updates.

Source link

Latest articles

Jack Dorsey’s Square has ‘no plans’ to purchase more Bitcoin ‘at this point’

Digital payments company Square, led by Twitter CEO Jack Dorsey, decided to hit the brakes—at least for the time being—on Bitcoin...

Bitfinex hacker will need 114 years to launder $7 billion worth of stolen Bitcoin

Only 4% of nearly 120,000 Bitcoin (around $7 billion today) stolen by a hacker from crypto exchange Bitfinex in 2016 have...

This firm turned an old power plant into Bitcoin farm—and mined $60 million in a year

Over the past few years, private equity firm Atlas Holdings has created arguably the most ambitious and self-sufficient Bitcoin mining facility...

Mark Cuban reaffirms Bitcoin plans after Tesla snub sparks concerns

Billionaire ‘Shark Tank’ star Mark Cuban said today that Dallas Mavericks, the Cuban-owned NBA basketball team, will continue to accept Bitcoin...

Related articles

Leave a reply

Please enter your comment!
Please enter your name here