A Net Inflow of $93 Million Pushes the Price of Bitcoin 1% Says Bank of America Report
“No good reason” to own Bitcoin except wealth preference, says bank’s report on cryptocurrency filled with bad takes.
There is no limit to bad takes on cryptocurrencies, especially from the mainstream financial service providers. And this week, the crypto market experienced a few.
To start with, Europe’s top markets regulator warned investors of “significant risks” involved in investing in crypto. Using its twice-yearly report on Wednesday, the European Securities and Markets Authority cautioned that “crypto-assets are highly risky and speculative” and that “consumers must be alert to the high risks of buying and/or holding these instruments, including the possibility of losing all their money.”
Have a lot of respect for @JamesGRickards, but there wasn't any substance behind these claims against Bitcoin.
Here's why Jim is wrong on #Bitcoin and why it is not going to zero.
— Charles Edwards (@caprioleio) March 17, 2021
This week, Bank of America also released its research note, calling Bitcoin “exceptionally volatile” that makes it “impractical” as a store of wealth or payment mechanism.
As a matter of fact, according to the bank’s analysts, there’s “no good reason to own bitcoin unless you see prices going up.” So, according to them, if you prefer wealth, then do invest.
“The main portfolio argument for holding bitcoin is not diversification, stable returns, or inflation protection, but rather sheer price appreciation, a factor that depends on bitcoin demand outpacing supply,” the note said.
The report clung to bitcoin’s anonymity utilized by terrorists and its environmental impact, saying Bitcoin’s network emits about 60 million tons of CO2 per year, apparently the same as Greece.
99.97% of the world’s energy (in USD) is devoted to powering a mixture of technologies with an energy intensity of ~10% while the remaining 0.03% powers the Bitcoin network with an energy intensity of ~1%. #Bitcoin is environmentally friendly & technically efficient. Thread👇
— Michael Saylor (@michael_saylor) March 17, 2021
The bank failed to make an effort to even understand the data, saying 95% of supply is controlled by the top 2.4% of addresses, which isn’t true, and compared it with the top 1% of Americans controlling 30.4% of the nation's household wealth.
While talking about the leading cryptocurrency being correlated to risk assets and not at all tied to inflation, it says Bitcoin is “sensitive” to increased dollar demand.
The report further argues that “a net inflow into Bitcoin of $93 mn may result in a 1% price rise, while the analogue for gold is more than 20 times higher.”
Well, it has been just this year that, just over a decade old, Bitcoin became a trillion-dollar crypto asset, up more than 14x from March 2020 low and 2x from its last bull run ATH. As of writing, BTC/USD is trading just under $58,000, down 6.4% from its $62k peak from this past weekend.
As for the precious metal, the hundreds of years old bullion has a $10 trillion market whose spot price is $1,725 per ounce, 12% down from its $2,075 ATH in August, beating the August 2011 high of $1,920, a mere 8% outperformance.