Posted 3 months ago | by @devadmin
Deutsche Bank has released a document entitled “Bitcoins: Can the Tinkerbell Effect Become a Self-Fulfilling Prophecy?” part of a three-part series of “The Future of Payments: Series 2.” Deutsche Bank’s research analyst states that BTC is “too important to ignore.” In a Tweet on Mar. 19th, the bank highlighted the report noting that Bitcoin was also facing an illiquidity shortage that could hurt its chances of becoming an asset class.
#Bitcoin’s market cap of $1 tn makes it too important to ignore. But will it evolve into an asset class, or will its illiquidity remain an obstacle? Find out more in the latest instalment of “The Future of Payments” from @MarionLaboure and #dbresearch: https://t.co/dx71OpCSKJ pic.twitter.com/YYoOcroPa0
— Deutsche Bank (@DeutscheBank) March 19, 2021
“Bitcoin’s market cap of $1 trillion makes it too important to ignore. As long as asset managers and companies continue to enter the market, bitcoin prices could continue to rise,” research analyst Marion Laboure, wrote.
However, she compared Bitcoin to Peter Pan’s Tinkerbell stating: “Bitcoin’s value will continue to rise and fall depending on what people believe it is worth.” Adding, “This is sometimes called the Tinkerbell Effect,” which is “a recognized economic term stating that the more people believe in something, the likelier it is to happen based on Peter Pan’s assertion that Tinkerbell exists because children believe she exists.”
The bank’s report presents Bitcoin as a commodity, currency, and equity covering all major markets. While expressing that “bitcoin transactions and tradability are still limited.”
The bank additionally highlights Bitcoin’s market capitalization of over $1 trillion expressing that its now the third-largest currency in the world in terms of the total value in circulation. The bank further states that the price of Bitcoin could continue to rise as long as the digital asset remains an attractive entry for asset managers and companies alike.
Deutsche Bank estimates that less than 30% of transactional activity in bitcoin is related to payments which means that most people are using it as a means of storage. This further enforces the narrative that Bitcoin is a storage of value. The bank expresses, for example, 28 million BTC was exchanged or the equivalent to 150% of the total Bitcoin in circulation. In comparison, the bank says that 40 billion Apple shares were exchanged, equating to 270% of the total.
Furthermore, the Bank found that the average number of BTC exchanged daily in U.S. dollars is equivalent to only 0.05% of Yen and 0.06% of GBP. “This is mainly due to the vast increase in bitcoin’s value recently,” the report states, adding that “In early 2019, bitcoin represented ‘only’ 3% of the US dollars in circulation, but in February 2021 it surged beyond 40% of the US dollars in circulation.”
In other words, this means that Bitcoin is now bigger than the Japanese Yen and even the Indian Rupee.
According to Deutsche Bank, Bitcoin must transform its potential into results, in the same way, Tesla has done to be successful going forward.
Deutsche Bank’s paper concludes Bitcoin’s current valuation has the broader shift toward cross-border digital currencies priced in, expressing that the digital asset must now demonstrate that it’s a valid useable payment solution.
Bitcoin is currently trading at [FIAT: $56,461.54] DOWN -2.7% in the last 24 hours according to Coingecko at the time of this report.