- A Deutsche Bank senior analyst recently emphasized that the large market cap of Bitcoin makes it “too important to ignore.”
- The bank official referred to BTC as the “21st-century gold.”
Bitcoin is the 21st Century’s Digital Gold
On Tuesday, an official at Deutsche Bank made a huge statement upon claiming that Bitcoin (BTC) could become the “21st century gold.” Marion Laboure, senior economist and market strategist at the bank’s research division, said the digital asset’s over a trillion US dollar market cap now makes it “too important to ignore.”
The analyst working at the largest bank in Germany by total assets pointed out that BTC’s fixed supply and decentralized nature make it the digital alternative to the precious metal. What’s more, its deflationary characteristics reinforce its scarcity, particularly its hard cap of 21 million coins. Right now, 89% of its supply is already in market circulation.
The strong declaration from a key personality in one of the oldest financial powerhouses in the world solidifies Bitcoin’s status and appeal to institutional players.
BTC is Not Fit as a Vehicle for Regular Transactions
Along the way, Laboure forecasted that digital currencies would shape the future of payments. However, she emphasized that despite its potential transformation as the digital gold of the era, Bitcoin remains a risky store of value due to its volatility. Hence, it’s not fit to become a mode of payment. In addition, governments do not recognize it as a legal tender, except in El Salvador.
Moreover, Laboure pointed out that the average time to validate transactions in Bitcoin’s base blockchain protocol is 10 minutes. There’s its ballooning transaction fee, too, which costs at a median of $20. These add up to its impracticality in regular transactions or payments.
Bitcoin to Remain ‘Ultra Volatile’
The analyst warned that while gold also exhibited volatility historically, Bitcoin has turned out to have wilder fluctuations than the precious element. Laboure expects BTC to remain “ultra-volatile” in the foreseeable future.”
Laboure’s primary consideration for her outlook is the current utility of Bitcoin. She estimated that two-thirds of users only utilize it for investment and speculation.
Then, the Deutsche Bank strategist pointed out that BTC’s limited tradability has a profound effect on its supply-demand dynamics. Large batches of purchases or market exits by whales often result in wild swings in the crypto asset’s prices.
Furthermore, Bitcoin has exhibited a high sensitivity to sudden changes in market perception. Most of the time, pivotal shifts in sentiment often create considerable pricing gaps.
