Bullish sign for BTC? US banks start bashing bitcoin again
Some US banks are starting to criticise Bitcoin again – even though many another has warmed to the asset over the past year.
Bitcoin’s notorious price swings are known to polarise. The asset, like most other cryptocurrencies, can move by several percentage points in a single day – a stomach-churning experience for those who use BTC as an “investment” and are otherwise used to trading in pebbles.
Such movements may not affect the average crypto investor with Bitcoin Storm a total holding of less than $10,000. However, when that scale reaches millions of dollars, it is either risk-averse hedge funds or individuals who take the BTC plunge.
Last year, as BTC moved from under $4,000 to over $41,000, banks and financial institutions talked a lot about Bitcoin as a single macro hedge or even an alternative to gold.
Banks such as JPMorgan and Morgan Stanley (although known as Bitcoin sceptics) believe the asset class is likely to attract “hundreds of billions of dollars” in the coming years.
Wealth management firm Fidelity estimates that family offices will eventually start buying and hoarding Bitcoin (Go to Buy Bitcoin Cheap Guide). And mutual fund giant MassMutual invested over $100 million in BTC last year, calling it a “first step” towards possible future plans.
But despite the recent jubilation, some banks seem to be keeping their views on Bitcoin in line with the asset’s price movements: The recent price crash in recent weeks has led some banks to restart their bitcoin-bashing.
The FUD returns
According to a report released last week by Bank of America, Bitcoin remains an overvalued asset – the “most crowded trade” in current times. The bank even says bitcoin is in a bigger “bubble” than most tech stocks – which have had their own run in the last year, with electric car maker Tesla going from under $200 in 2019 to over $800.
Then came a survey commissioned by Deutsche Bank in which 90% of respondents said the “most extreme” bubble was bitcoin, with 50% of all survey respondents giving it the maximum score of 10 on a scale of 1 to 10 for bubbles.
In terms of a long-term outlook, respondents said both Bitcoin (and stocks like Tesla) were more likely to halve in price than double.
Such outlooks came despite an expected 92% higher global inflation next year – a record high that Bitcoin is expected to hedge against – with 71% of respondents saying the US Federal Reserve will continue to print more money to allow markets to grow further.
The latest of these warnings came yesterday. Economists at UBS had told their clients that Bitcoin was not even a real currency. UBS economist Paul Donovan:
“People are unlikely to want to use something as a currency if they have absolutely no certainty about what they can buy with it tomorrow”