Citi analysts believe Bitcoin is at a “tipping point” and may one day become the “currency of choice” for international trade. In recent months, companies such as Tesla and Square have invested in it, and the largest banks have begun to explore the possibility of issuing their own cryptocurrencies, writes CNBC, citing Citi’s research note.
Bitcoin, which rose from $ 4.7K in March 2020 to $ 48K in March 2021, could become the world’s reserve currency in the future, Citi said in a note. “There are many risks and obstacles to the progress of bitcoin,” analysts wrote. “Events in the near future are likely to be decisive as the currency balances between mass acceptance and speculative explosion.”
The value of bitcoin began to rise sharply in early February after Tesla Elon Musk invested $ 1.5 billion in cryptocurrency. In the same month, Visa announced the launch of its own system for buying cryptocurrencies, which will be integrated with banks. Mastercard has promised to start supporting cryptocurrency transactions in 2021.
Financial conglomerate Morgan Stanley plans to invest $ 150 billion in Bitcoin. BNY Mellon Bank will help clients store, transfer and issue digital assets.
This leads crypto investors to believe that Bitcoin’s explosive growth in 2021 is different from the 2017 scenario, when its rate reached $ 20,000 and then collapsed by almost 80%. “I think Bitcoin is a much more stable asset class today than it was three years ago,” MicroStrategy CEO Michael Sailor told CNBC.
Bitcoin and other cryptocurrencies are subject to sharp spikes in volatility, CNBC notes. A week after reaching a record mark of $ 58 thousand, its value fell by more than $ 10 thousand.
Skeptics view Bitcoin as a speculative asset and fear it could become one of the largest market bubbles in history. Economist Nouriel Roubini, who predicted the 2008-2009 financial crisis, warns against buying bitcoins. The fact that Tesla buys bitcoins doesn’t mean investors should follow suit, he wrote in a column for the Financial Times. He believes that this bubble “will eventually burst again.”