2020 was a year of recovery for bitcoin with an increase of 279% over the 12 months. In December 2020, the queen of cryptocurrencies broke through $ 20,000 for the first time in December and then touched almost 30,000 at the end of the month. In 2021, thanks also to the ‘push’ of Tesla founder Elon Musk who decided to invest 1.5 billion dollars in cryptocurrency in February, bitcoin first exceeded $ 50,000 and then in recent days it also exceeded the quota $ 60,000, reaching a record $ 61,556. After years in which cryptocurrencies and their trends have been considered as speculative bubbles destined to burst, the gaze of the market players seems to have changed rightly or wrongly. According to some analysts, the current increase in bitcoin would have more solid foundations than in the past: traditional market operators such as investment funds and companies now seem to look at bitcoin as a possible investment. And there are those who begin to ‘bet’ on a phenomenon that could be destined to last over time.
In a Deutsche Bank report argues that bitcoin is now “too important to ignore”. The market capitalization of the cryptocurrency, at over $ 1,000 billion, in fact, according to analysts of the German bank, “makes it too important” to be ignored. According to analysts of the German credit institution, “as long as fund managers and companies continue to be attracted” to cryptocurrency, bitcoin prices “will continue to rise”. However, “volatility should remain high” due to its limited marketability: therefore “the value of bitcoin will continue to rise and fall” in the near future.
A phenomenon that the analysts of the credit institution call the ‘Tinkerbell Effect’ referring to the fictional character created by James Barrie in his famous work Peter Pan: “the more people believe something the more likely it is that this something will happen. “, a bit like Tinker Bell which exists because children believe it exists. For Deutsche Bank, central banks and governments have now understood that cryptocurrencies are now “there and will remain” and therefore “it is expected that they should start regulating them at the end of this year or early next year”.
However, for the German bank “in the medium to long term” and above all due to the high volatility “it is unlikely that cryptocurrencies will be used as a popular means of payment”. According to Deutsche Bank, less than 30% of bitcoin transactions are linked to payments for goods and services (around 70% is instead used as a financial investment): in 2020, the bank’s analysts note, 28 million bitcoins changed owners, that is the equivalent of 150% of the total amount of bitcoins in circulation. At the same time, 40 million Apple shares were traded, the equivalent of 270% of the total shares outstanding. In short, for Deutsche Bank, bitcoin “has yet to prove its value as a payment currency to live up to its reputation”.
Tesla’s current market capitalization, Deutsche Bank notes, “is $ 665 billion as of March 12, 2021, almost five times that of Ford and GM combined”. A remarkable capitalization when you consider that GM sold about 8 times more cars than Tesla in 2020 and Ford sold 5 times more. “The ratio of capitalization to vehicles sold by Tesla and Ford shows that Testa’s current value is 63 times higher than Ford’s.” Tesla’s market valuation is tied to the development of the automotive market towards the electric car and Tesla is expected to remain an absolute leader in the industry. Similarly, analysts of the German bank note, “the total value of bitcoin is valued at 1.075 billion as of March 15, 2021”, that is 102% of the value of the yen, 65% of the euro, 53 of the dollar and the 904% of the pound. Yet, Deutsche Bank notes, “the number of bitcoins that are traded on average daily in dollars is the equivalent of 0.05% against the yen and 0.06% against the pound”.
The current market assessment of bitcoin is part of the assumption that in the future “it will become an important means of payment”. Tesla’s history is five years older than that of bitcoin and, Deutsche Bank notes, “has always sparked debate among people who see the Tesla phenomenon as a temporary and fashionable phenomenon and those who see Tesla as the future of the industry. automotive “. Market sentiment, the German bank’s analysts note, “has started to change significantly over the past 18 months as Tesla started posting first results” and sales have soared. Making a parallel, the analysts of the German credit institution argue that “the next two or three years should be the turning point for bitcoin: the consensus and its future could emerge gradually”.
Bitcoin was born on January 3, 2009. Its first 12 years of life were years of fluctuating growth for the cryptocurrency which represents over two thirds of the cryptocurrency market. After reaching parity with the dollar in February 2011, the value of bitcoin has grown over time, reaching 100 dollars in April 2013. In 2016, the adoption by some online stores of bitcoin as a currency for purchases and Japan’s central bank acceptance of the role of cryptocurrency means that the value resumes its run, ending the year at $ 959.
The two-year period 2017-18 was the one that will show the extreme volatility of bitcoin. As Deutsche Bank recalls in its report at the beginning of 2017 “the value of bitcoin was around $ 1,000. In December of the same year, bitcoin reached almost $ 20,000. In February 2018, the price dropped to $ 7,000. “. Bitcoin closes 2018 at ‘just’ $ 3,200. In mid-2019, between ups and downs, a bitcoin reaches $ 12,500 after starting the year around 4 thousand. From $ 4,900 in March 2020, Deutsche Bank points out, “bitcoin exceeded $ 60,000 last week: one of the most important factors that explained the rise in bitcoin’s value was hedge fund entry into that market. and other institutional investors “. Every year, Deutsche Bank recalls in its study, many people have judged Bitcoin and Tesla as “dying”: since 2010, the German bank notes, bitcoin “has been declared dead about 400 times” but by now the trend is down.
According to some rumors that emerged in February, Deutsche Bank is studying the possibility of offering new services to large financial institutions that want to invest in cryptocurrencies: in addition to the purchase, the German credit institution would also guarantee the custody of crypoto-assets. According to what was leaked, the service will be called Deutsche Bank Digital Asset Custody.