Bank of America published research examining the current situation and future prospects of the cryptocurrency business, which has grown to the point of being “too big to ignore.”
Bank of America has produced a paper titled “Digital Assets Primer: Only the First Inning,” lead by Alkesh Shah, head of Global Cryptocurrency and Digital Asset Strategy. The report provides an in-depth overview of the condition of the blockchain sector, from cryptocurrencies to Defi and NFTs.
According to the research, the cryptocurrency and decentralized finance services businesses have expanded to the point of being “too huge to ignore.”
According to BofA’s analysis, approximately 221 million consumers have swapped cryptocurrency or utilized a Defi service, with growth continuing. Similarly, institutional investors’ rising participation demonstrates that cryptocurrencies are far more than a transitory trend driven by retailers.
Bank of America is Optimistic on Cryptocurrencies Other Than Bitcoin
Bank of America notes that the Defi ecosystem attracted close to $17 billion in aid from institutional investors in the first half of 2021, up from $5.5 billion in the first half of 2020. Similarly, crypto industry mergers and acquisitions increased from $940 million in 2020 to $4.2 billion in 2021.
Alkesh Shah maintained an agnostic attitude in an official press release, arguing that cryptocurrencies are more than Bitcoin.
“While Bitcoin is critical, the digital asset ecosystem encompasses so much more. Our research will examine the consequences for industries ranging from finance to technology, supply chains, social media, and gaming.”
Additionally, the team claims that the way we interact with the world may undergo dramatic changes as a result of the emergence of blockchain technologies:
“In the near future, you may be able to use blockchain technology to unlock your phone; purchase stocks, real estate, or a fraction of a Ferrari; earn dividends; borrow, loan, or save money; or even pay for petrol or pizza,”
Additionally, Bank of America stated that the emergence of NFTs surprised everyone. The researchers expressed their concern that the high valuations placed on certain NFT pieces, such as fractionalized artworks or NFTs from the crypto game Loot, could create a bubble affecting many investors who are unaware of the hazards they face.
Diverse Periods, Diverse Attitudes
This stands in stark contrast to previous assessments in which Bank of America characterized bitcoin as volatile, unworkable, and of limited utility as a store of value.
As recently as March 20201, Bank of America produced research stating that bitcoin’s ascent to $60,000 was primarily due to speculation and not due to the cryptocurrency’s intrinsic benefits:
“Broadly speaking, we find that bitcoin has been less tempting as an inflation hedge than commodities and even equities, which have a higher link to inflation.
As such, we believe that the primary portfolio justification for owning bitcoin is not diversification, lowering volatility, or inflation protection, but a rather pure price appreciation, which is entirely dependent on bitcoin demand exceeding supply on a forward basis.”
However, following other banks’ lead, Bank of America established a research group dedicated completely to studying cryptocurrencies and the blockchain industry, progressively altering its approach to these burgeoning firms.
Also Read: FASB To Change Bitcoin Accounting Standard
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