Bitcoin at 'tipping point,' Citi says as price surges

[webfact]

Bitcoin at 'tipping point,' Citi says as price surges

 

A collection of bitcoin (virtual currency) tokens are displayed in this picture illustration taken Dec. 8, 2017. REUTERS/Benoit Tessier/Illustration/File Photo

 

NEW YORK/LONDON (Reuters) - Bitcoin rose nearly 7% on Monday as risk assets rallied after last week's bond rout cooled, with Citi saying the most popular cryptocurrency was at a "tipping point" and could become the preferred currency for international trade.

 

With the recent embrace of the likes of Tesla Inc and Mastercard Inc, bitcoin could be at the start of a "massive transformation" into the mainstream, the investment bank said.

 

Goldman Sachs, meanwhile, has restarted its cryptocurrency trading desk and will begin dealing bitcoin futures and non-deliverable forwards for clients next week, a person familiar with the matter told Reuters.

 

"Those drawing parallels to the bursting of the crypto bubble in 2017 may not be accounting for the technology's advancement since then," said Paolo Ardoino, chief technology officer at cryptocurrency exchange Bitfinex.

 

Bitcoin, which hit a record high of $58,354 in February, could in the future become the preferred currency for international trade or face a "speculative implosion", Citi said.

 

"There are a host of risks and obstacles that stand in the way of bitcoin progress," Citi's analysts wrote. "But weighing these potential hurdles against the opportunities leads to the conclusion that bitcoin is at a tipping point."

 

The world's largest cryptocurrency was up 6.8% at $48,330 in early afternoon trading. Smaller rival ether rallied 6.8% to $1,517.

 

Bitcoin's recent performance has come with the growing involvement of institutional investors in recent years, contrasting with its heavy retail investor focus for most of the past decade, Citi said.

 

If businesses and individuals gain access via digital wallets to planned central bank digital cash and so-called stablecoins, bitcoin's global reach, traceability and potential for quick payments would see it "optimally positioned" to become the preferred currency for international trade, Citi added.

 

Bitcoin, designed as a payment tool, is little used for commerce in major economies, hampered by high volatility and relatively costly transactions. Yet it has gained traction over in some emerging markets, such as Nigeria, over the past year.

 

Such a dramatic transformation to the de facto currency of world trade - a status currently held by the dollar - would depend on changes to bitcoin's market to allow wider institutional participation and closer oversight by financial regulators, Citi said.

 

Still, shifts in the macroeconomic environment could also make the demand for bitcoin less pressing, it added.

 

The recent surge in interest, sparked by a narrative that bitcoin can act as a hedge against inflation, has driven it to a record high and a $1 trillion market capitalization.

 

But it has pulled back more than $11,000 from those levels in the past week on questions over the sustainability of such high prices.

 

New York Attorney General Letitia James on Monday warned investors to take “extreme caution when investing in virtual currencies”.

 

(Reporting by Thyagaraju Adinarayan and Tom Wilson; Additional reporting by Gertrude Chavez-Dreyfuss in New York and Karen Pierog in Chicago; Editing by Hugh Lawson and David Goodman)

 

-- © Copyright Reuters 2021-03-01

 

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[wombat]

The uber pump and dump is perhaps about to dump?

[jesimps]

21 minutes ago, wombat said:

The uber pump and dump is perhaps about to dump?

Sometimes pump other times dump, but it's the trend that counts. Bitcoin's is undoubtedly up. Some famous Wall St guru was famous for saying in answer to a question "Follow the trend stupid", or words to that effect.

[Heng]

At least Citi typically pumps up.   Not like Guggenheim who apparently are trying to play it both ways.

[rickudon]

On 3/2/2021 at 3:48 AM, webfact said:

and could become the preferred currency for international trade.

Might be a bit hard to set a price point for your product .......

[Heng]

What folks would do is price in Euros, US$, SG$, etc., but then 'prefer' cryptocurrency (for payments, it'd be BCH, LTC, and BTC... I put BTC last because of its crazy upward trend and sometimes SLOW processing/transfer times during large upswings/downturns) as a payment method, especially for merchants that want to cut out the chargeback/dispute factor from their sales.

[Stocky]

On 3/2/2021 at 3:48 AM, webfact said:

preferred currency for international trade

Which requires a degree of stability that allows forward planning. Bitcoin is anything but. That's not even considering the humungous amount of power needed to run the damn things. It's not going to be anything but a fad, preferred currency for international trade my ar@#

[rickudon]

17 hours ago, Stocky said:

That's not even considering the humungous amount of power needed to run the damn things.

This is a big issue. It is very hard to quantify the actual power usage, but is something between the electrical consumption of a country like the Netherlands up to that of the UK. SOMEONE is paying for that power, and sooner or later the bitcoin users will find transactions will come with a substantial 'fee'.

[Susco]

On 3/2/2021 at 8:10 AM, jesimps said:

Sometimes pump other times dump, but it's the trend that counts. Bitcoin's is undoubtedly up. Some famous Wall St guru was famous for saying in answer to a question "Follow the trend stupid", or words to that effect.

 

Yep the trend is UP. Between January 2018 and 2020 the trend was DOWN.

 

You know what the trend will be next year, or even next month?