Bitpush Deutsche Bank report: Bitcoin is too important to ignore

Deutsche Bank released a new report today, saying that given its $1 trillion market cap, Bitcoin is now "too important to ignore."

The report states that Bitcoin’s price is likely to continue to rise as long as it continues to attract asset managers and corporates.

Deutsche Bank estimates that less than 30% of Bitcoin trading activity is related to payments. For example, 28 million Bitcoins changed hands in 2020, equivalent to 150% of the total Bitcoin in circulation. And Apple stock traded 40 billion shares, accounting for 270% of the total.

Furthermore, the average daily amount of Bitcoin exchanged for U.S. dollars is only 0.05% of that for Japanese yen and 0.06% for British pounds.

The bank therefore expects Bitcoin to remain volatile due to limited tradability.

Deutsche Bank analyst Marion Laboure believes that Bitcoin will continue to exist but will maintain its price volatility, with Bitcoin's low liquidity contributing to its price volatility.

Marion Laboure explained that it would only take a few additional large-scale purchases or sales to significantly affect the market supply and demand balance, and Bitcoin would continue to rise and fall depending on people's views on its price. This is the impact of the "Tinkerbell Effect."

The "fairy effect" is an economic term used to describe the fact that when more people believe in something, it is more likely to happen. The term comes from the story of Peter Pan, where the fairy Tinker Bell exists because children believe in her.

Deutsche Bank wrote in the report that Bitcoin is now another fund management tool. Recently, some listed companies have begun to convert cash in their treasury into Bitcoin as an alternative means of preserving value.

For example, in August 2020, business analytics company MicroStrategy converted $425 million worth of cash in its inventory into Bitcoin. Company leaders believe that Bitcoin, as the world's most widely adopted cryptocurrency, is a reliable store of value, and they believe that "Bitcoin will provide better return opportunities and preserve our capital over time compared to holding cash."

Square then spent $50 million to buy Bitcoin. Several other companies followed suit, boosting confidence in Bitcoin as a safe-haven asset.

On February 8, 2021, Tesla said it had invested $1.5 billion in Bitcoin and that the company would soon accept Bitcoin as a form of payment for purchasing vehicles.

Deutsche Bank says Bitcoin must turn its potential into actual results, just like Tesla.

Just like Bitcoin, Tesla has sparked countless debates about whether it is the future of automobiles or a “dying fad.” Over the past 18 months, as Tesla has proven itself capable of delivering vehicles like the Model 3 at scale, market sentiment has shifted dramatically.

The report points out that the next two to three years should be a turning point for Bitcoin. As people pay more and more attention to the development of digital currency, a consensus on the future of Bitcoin may emerge.

The Deutsche Bank report concluded that Bitcoin must prove its worth as a means of payment to live up to its reputation.

Recently, Bitcoin has attracted more and more attention from mainstream institutions. Wall Street investment bank JPMorgan plans to launch a basket of products related to Bitcoin to provide clients with crypto exposure. And it has distributed a set of educational materials to clients to help them understand the basics, risks and potential of Bitcoin and cryptocurrencies. Bank of America released a report yesterday saying that the largest public holder of Bitcoin is Grayscale, whose Bitcoin Trust Fund may own 700,000 Bitcoins, accounting for 3.5% of the total supply. Morgan Stanley has become the first major US bank to provide approved wealth management clients with a channel to invest in Bitcoin funds.

Image source: Deutsche Bank