This week, Bank of America released their latest crypto report, which shows Bitcoin has risen above $50,000. The crypto sector is “too big to ignore,” according to BofA strategists Alkesh Shah and Andrew Moss, and “there could be more potential than doubters believe.”
Let’s take a look at some of the report’s important findings from a bird’s eye perspective.
Both BofA and our team’s internal perspective on Bitcoin inflows reflect strong institutional interest as BTC holds firm above $50,000.
Bank of America also mentions the potential for further integration of blockchain technology in daily life; in addition to traditional financial institutions. “In the near future, you may be able to use blockchain technology to unlock your phone; buy a stock, house, or fraction of a Ferrari; receive a dividend; borrow, loan, or save money; or even pay for gas or pizza,” according to the report. Of course; many different projects are already developing tools for some of these specific use cases, as well as many others.
Aside from existing economies that are ripe for revitalization; the report highlights projects and firms that are becoming inherently native to the digital asset ecosystem. Both of these categories have seen significant growth; as evidenced by the chart below, which shows mentions of digital asset language on earnings calls:
If there is one thing that is abundantly clear, it is that digital assets are on the radar of major corporations, and as BofA puts it, “corporations aren’t risking being left behind.” These earnings calls included companies in information technology and finance, as well as consumer goods, real estate, health care, and other industries.
All The Rest: DApps, NFTs, And The Regulatory Battles
It’s difficult to justify lumping together the massive growth of DeFi; Dapps, and NFTs while still giving each category a fair shake. Nonetheless; that is what we will do here to provide a brief summary of Bank of America’s thoughts on everything that isn’t a fungible token or a straightforward blockchain project.
The report acknowledges the emergence of DeFi; despite the fact that it is viewed as a constant threat to traditional financial firms such as Bank of America. According to BofA, Dapps have the potential to bring financial services to nearly 2 billion unbanked people worldwide. What many crypto advocates; and supporters have been thinking and; working towards is now being widely acknowledged by some of the game’s most powerful traditional institutions.
When it comes to NFTs, the sentiment is similar to that of digital assets in general; Bank of America is bullish. According to the firm; NFTs are “changing the way creators connect with fans and receive compensation.” Indeed, as BofA acknowledges; NFTs have enormous potential for demonstrating ownership without the use of a middleman – and; that there is substantial demand for this across a wide range of verticals.
Finally, regulatory uncertainty was cited in the report as the firm’s top near-term risk, which is understandable. That regulatory risk may be exacerbated by stablecoins; but the report noted that, despite having fewer liquid reserves (which may lead to increased regulatory scrutiny); stablecoins serve as a “waiting zone between fiat currencies and digital currencies; which could further accelerate adoption of the latter.” According to the report; central bank digital currencies (CBDCs) are a “when, not if” situation.
Close The Curtain
To summarise, we’re watching everything unfold in real time. According to the report, over 20 million U.S. adults own digital assets (roughly 14 percent); with an additional 19 million or so planning to purchase digital assets this year. Rising interests, however, are not limited to individuals, but also exist within corporations.
Furthermore, growth in ownership, interest, and so on does not end or begin with Bitcoin. Bitcoin has amassed one of the world’s largest market values; and it is the rising tide that is lifting altcoin boats in this case. The BofA report delves into Twitter mention analysis; revealing that Bitcoin mentions have decreased year to date (as of August), while many altcoin mentions have increased. Meanwhile, Bitcoin volatility has decreased in comparison to the early years, as increased adoption results in more “diamond hands.”
Furthermore, CBDCs are on the horizon. According to Bank of America, countries accounting for roughly 90% of global GDP are reportedly investigating CBDCs. Meanwhile, interest in NFTs and DeFi products is growing rapidly.
While acknowledging regulatory challenges that the market will face, the BofA report does not shy away from difficult topics. Illicit crypto activity has long been a source of concern for bears, but according to BofA; digital assets associated with illegal activity have been cut in half since 2019.
Overall, BofA is optimistic about the future. As more traditional financial institutions come to terms with crypto’s role in a variety of industries, adoption will only grow. Hold on to your seats and fasten your seatbelts.