5 Key Takeaways From Bank of America’s Bitcoin Report

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While Citibank praised Bitcoin’s potential, analysts at Bank of America published a damning indictment of the biggest cryptocurrency.

They do, however, see much more promise in DeFi.

Bank of America Bearish on Bitcoin

Central Bank Digital Currencies Will Replace Bitcoin

Several central banks are actively working on CBDC, with countries such as China and the UAE even preparing inter-operability between their national digital currencies. Bank of America described the move as “defending their territory from cryptocurrencies,” suggesting that CBDCs would quickly replace private cryptocurrencies whose use could be restricted.

After heavy restrictions, BoA adds that citizens will turn to CBDCs as they provide users with governmental backing and a far less volatile asset.

Bitcoin Is Still Too Volatile

According to Bank of America, Bitcoin should have already reached maturity as an asset. As witnessed during last March’s Covid crash, the massive swings in value suggest that Bitcoin can’t be a store of value.

The firm writes that Bitcoin’s volatility is higher than forex, gold, or silver and shows no sign of slowing down as 2021 is the second most volatile year to date.

Bitcoin Is an Environmental Disaster

The price of Bitcoin is directly correlated to its energy consumption, BoA analysts argue. “Should prices rise to $1mn, Bitcoin may turn into the world’s 5th largest emitter, surpassing Japan.”

This is a very debatable claim as the truth about the environmental impact of Bitcoin is much more complex and not as directly correlated to price.

Whales Dominate Crypto

BoA reports that 2.4% of addresses hold 95% of the Bitcoin supply while the rest are mostly empty, comparing this to the top 1 percent of Americans who hold 30% of all household wealth.

This number fails to consider that a majority of investors do not hold their own Bitcoin but often trust exchanges to do so.

The issue of calculating Bitcoin concentration through this…

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