Could this be the “moment of truth” for Bitcoin?
Bitcoin (BTC) has reached a „breakthrough“, according to a Citi report.
The growing adoption by institutional investors could lead to a „massive transformation“ for BTC.
On the other hand, BTC could face a „speculative implosion“
Bitcoin (BTC) has reached a “breakthrough”, according to a Citi report, Reuters says .
According to the report , the industry’s flagship cryptocurrency , BTC, could become the preferred medium for international trade or face a “speculative implosion”.
Over the past decade, Bitcoin has been primarily championed by retail investors. However, BTC has been increasingly adopted by institutional investors, such as Tesla and Mastercard .
This growing institutional acceptance could lead to a “massive transformation” of BTC, Citi said. Such adoption has already seen the price of BTC increase tenfold, from $ 4,700 in March 2020 to its current price of around $ 47,000 .
Le BTC en position optimal
According to the Citi report, the large-scale adoption of bitcoin would depend on the acceptance by major financial players of digital currencies and wallets. For example, some central banks intend to issue digital currencies and a stablecoin .
If the latter started to appear and if individuals and businesses began to use them through digital wallets, BTC would be “in an optimal position” to become the preferred currency for international trade, according to the report. This is due to the already global reach of BTC, its traceability and its ability to make fast payments.
However, for BTC to replace the dollar as the defacto currency of world trade, the market would need to change to allow for broader participation as well as clearer oversight by financial regulators. Macroeconomic changes could alter demand for BTC in the meantime, the report adds.
“There are a host of risks and obstacles that stand in the way of Bitcoin’s progress,” Citi analysts wrote. „But comparing these potential obstacles with the opportunities leads to the conclusion that bitcoin is at a decisive stage.“
Recent movements in the price of BTC
In February, BTC first crossed the $ 50,000 threshold, reaching a peak of $ 58,413 on Sunday, February 21. Citi attributed the rise to the growing prospect that BTC could serve as a hedge against inflation, an argument shared by MicroStrategy CEO Michael Saylor.
However, the price of BTC plunged over the past week , hitting a low of $ 43,813 on February 28. Citi analysts cite skepticism about the sustainability of such a high price point as the cause of the correction. Bitcoin is currently trading around $ 47,000.