Bitcoin is, according to a new report published by Deutsche Bank, now “too important to ignore” given its $1 trillion market capitalization, and its price could keep rising as long as companies and asset managers keep buying BTC.
According to the report, by analyst and Harvard economist Marion Laboure, the real debate is whether bitcoin’s evolution into its own asset class comes from its valuation alone, as the cryptocurrency’s relatively low liquidity and tradability remain an obstacle.
Laboure compared bitcoin to Apple shares, pointing out that 28 million BTC, equivalent to 150% of all the coins in circulation, changed hands last year. In comparison, 40 billion Apple shares, equivalent to 270% of the shares in circulation, were traded.
The price of bitcoin, he said, is impacted by large purchases given its volatility. Its price will nevertheless keep on rising and falling depending on what people believe it’s worth, based on the so-called “Tinkerbell Effect.”
The Tinkerbell effect is, according to MarketWatch, an economic term that “describes how something is likelier to happen when more people believe in it.” It’s named after Peter Pan’s claim that the fairy Tinkerbell exists because children believe it does.
Laboure further compared bitcoin to electric car maker Tesla, as the cryptocurrency will “have to transform potential into results to sustain its value proposition.” Just like BTC, Tesla sparked debates as to whether it was the future of the car industry or a fad, but sentiment shifted after it started successfully delivering cars at scale.
The report comes after major banks made headlines in crypto news outlets. Morgan Stanley is set to become the first large bank in the United States to offer its wealth management clients access to bitcoin funds. Bank of America, on the other hand, published a report bashing BTC claiming the main argument for the cryptocurrency its price appreciation.
The world’s largest custodian bank, Bank of New York Mellon (NYSE: BK), has invested in crypto custody startup Fireblocks as part of a $133 million funding round that saw participation from hedge fund Coatue Management, growth equity firm Stripes, and others.
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