Bitcoin is the Third Largest Currency in Circulation After USD & Euro: Deutsche Bank Report
While Bank of America is writing about “Bitcoin’s Dirty Little Secrets” and that there’s “no good reason to own BTC unless you see prices going up,” according to Deutsche Bank, Bitcoin is “too important to ignore.”
Bitcoin’s total value is around 102% of the yen in circulation, 65% of the euros, 53% of the U.S. dollars, and 904% more than the amount of British pounds, as per the report. However, the average number of bitcoins exchanged daily represents only around 0.06% of British pounds (GBP) and 0.05% of Japanese yen in circulation.
According to Deutsche, Bitcoin is now the third-largest currency in circulation behind USD and Euro.
According to Deutsche Bank analyst and Harvard economist Marion Laboure, low liquidity remains a key obstacle.
For this, he compared 150% of the total Bitcoin in circulation, 28 million BTC, changing hands in 2020 to that of Apple stock, whose 40 billion shares, 270% of the total in circulation changed hands last year.
This means only a few large purchases or market exits are needed to “significantly impact the supply-demand equilibrium.”
As we reported, the BofA report also estimated that a net inflow of $93 million could result in a 1% price appreciation in Bitcoin.
As long as Bitcoin continues to attract corporations and asset managers, its price can continue to appreciate. But due to its limited tradeability, the crypto asset is also expected to remain volatile.
This means BTC prices will continue to rise and fall depending on what people believe it is worth; that is the “Tinkerbell Effect,” said Laboure.
Bitcoin, in fact, is like Tesla because it “will have to transform potential into results to sustain its value proposition.”
As the sentiments have shifted dramatically in favor of the electric car maker, Bitcoin’s current valuation towards cross-border digital currencies is priced in, and it must demonstrate its value as a means of payment to live up to its reputation, says the bank.