Bitcoin is now “too important to ignore” given its $1 trillion market capitalization, according to a new report by Deutsche Bank.
However, the cryptocurrency is expected to remain volatile due to limited tradability.
Deutsche Bank estimates that less than 30% of transactional activity in bitcoin is related to payments. In 2020, for example, 28 million BTC changed hands, equivalent to 150% of the total bitcoin in circulation. Meanwhile, 40 billion Apple shares were exchanged, equating to 270% of the total.
Furthermore, the average number of BTC exchanged daily in U.S. dollars is equivalent to only 0.05% of yen and 0.06% of GBP that do so.
Therefore, bitcoin must transform potential into results, in the same way Tesla has done, according to Deutsche.
Tesla, like bitcoin, has sparked numerous debates about whether it is the future of the car or a “soon-to-die fad.” Sentiment has shifted dramatically in the last 18 months as Tesla proved itself able to deliver cars such as the Model 3 at scale.
Bitcoin’s current valuation has the broader shift toward cross-border digital currencies priced in, therefore it must demonstrate its value as a means of payment to live up to its reputation, Deutsche Bank’s paper concludes.
Deutsche Bank’s plans to develop a “fully integrated custody platform for institutional clients and their digital assets” were unveiled in December 2020 in a World Economic Forum report.