Citi analysts say the Bitcoin cryptocurrency is at a “tipping point”. Thus, in the future it could become the currency of choice for international trade or face a “speculative boom.”
“There are a number of risks and barriers to the progress of Bitcoin,” wrote Citi analysts. “But weighing these potential hurdles with the odds leads to the conclusion that Bitcoin is at a tipping point.” As quoted by Resuters.
According to the Citi report, with support by big companies such as Tesla Inc and Mastercard Inc. Bitcoin could be the beginning of a “massive transformation” into the mainstream.
In addition, the growing involvement of institutional investors in recent years contrasts with the heavy retail focus over most of the last decade.
However, according to Citi, if businesses and individuals gain access via digital wallets to the central bank’s planned digital treasury and stablecoins. Bitcoin’s global reach, traceability and potential for fast payments will see it “optimally positioned”. In order to become the currency of choice for international trade.
Bitcoin is Constrained by Volatility and Expensive Transactions
Bitcoin, which was designed as a means of payment and at least used for trading in major countries. It is hampered by high volatility and relatively expensive transactions. However, over the past year it has gained traction in some emerging markets such as Nigeria.
The dramatic transformation for bitcoin to become the de facto world trading currency. Whose current status is held by the dollar. It will depend on changing its market to allow for wider institutional participation. As well as closer scrutiny by financial regulators.
However, shifts in the macroeconomic environment can also make bitcoin demand less urgent.
The recent surge of interest in bitcoin, fueled by a narrative that could act as a hedge against inflation. It has pushed the cryptocurrency to a record high of US $ 58,354 and a market cap of US $ 1 trillion.
But it has pulled back more than US $ 11,000 from that level last week due to questions about the sustainability of these high prices. Bitcoin is trading 4.5% higher at $47,284 on Monday, up more than 60% so far this year.
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