U.S. banking giant Bank of America (BofA) claims only $93 million in capital is needed to influence Bitcoin’s price by one percent.
According to TheStreet, in a report (titled “Bitcoin’s Dirty Little Secrets”) published last week, Bank of America slammed Bitcoin, calling the cryptoasset slow, volatile and impractical. The banking giant also highlighted the environmental impact of Bitcoin mining and said the cryptoasset did not perform as a store-of-value or provide a hedge against inflation.
The report read:
“As such, the main portfolio argument for holding Bitcoin is not diversification, stable returns, or inflation protection, but rather sheer price appreciation, a factor that depends on Bitcoin demand outpacing supply.”
In addition to finding that Bitcoin has become correlated to other risk assets, the BoA analysts claimed it only required $93 million worth of inflows to move the price by 1%. The researchers compared Bitcoin to gold and 20-year-plus treasury bonds, saying both of these markets would require $2 billion and $2.25 billion, respectively, to move a similar percentage point.
The report also said:
“What has created the enormous upside pressure on Bitcoin prices in recent years and, particularly, in 2020? The simple answer: modest capital inflows.”
BoA highlighted the heavy accumulation of Bitcoin by whales as contributing to the market impact, noting that most large-volume addresses had yet to sell throughout the price climb.
Featured Image Credit: Photo via Pixabay.com