Bank Of America’s Crypto Report: All You Need To Know
October 06 2021 - 8:47PM
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Bank of America released their latest crypto report this week, as
Bitcoin returns north of $50K. BofA strategists Alkesh Shah and
Andrew Moss described the crypto market as “too large to ignore”
and that “there could be more opportunity than skeptics expect.”
Let’s take a bird’s eye view on key findings from the 140+ page
report. Crypto, Institutionalized As BTC hangs tough above $50K,
both BofA and our team’s internal perspective on Bitcoin inflows
reflect strong institutional interest. Additionally, beyond simply
traditional financial institutions, Bank of America also cites the
potential for further integration of blockchain technology in daily
life. “In the near future, you may 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,” the report states. Of course, many different projects
are already working on tools for some of these exact use cases, and
a whole lot more. Outside of existing economies ripe for
reinvigoration, the report also calls out projects and firms that
are becoming inherently native to the digital asset ecosystem.
There has been ample growth across both of these categories,
exemplified by the below chart showing mentions of digital asset
language on earnings calls: If there is one thing that is
abundantly clear, it’s that digital assets are on major corporate
radars, and as BofA states – “corporations aren’t risking being
left behind.” These earnings calls included companies in
information technology and finance, but also included consumer
staples, real estate, health care, and more. All The Rest: DApps,
NFTs, And The Regulatory Battles It’s hard to justify bucketing the
immense growth of DeFi, Dapps, and NFTs all in one place while
still giving the respective categories their fair shake.
Nonetheless, that’s what we’ll do here to provide a brief recap on
Bank of America’s thoughts on everything that isn’t a fungible
token or straightforward blockchain project. The report soberingly
acknowledges the emergence of DeFi, despite it being seen as a
continual threat to traditional financial firms like Bank of
America themselves. BofA described Dapps as having the potential to
bring financial services to nearly 2B unbanked individuals across
the globe. What many crypto advocates and loyalists have been
thinking and working towards is now becoming widely acknowledged by
some of the biggest traditional institutions in the game. When it
comes to NFTs, the short stroke is that the sentiment reflects
digital assets in general: Bank of America is bullish. The firm
describes NFTs as “changing the way creators connect with fans and
receive compensation.” Indeed, as BofA acknowledges, NFTs have
immense potential in demonstrating ownership without any sort of
middleman fee – and that this is substantial demand for this across
a wide variety of verticals. Finally, regulatory uncertainty was
cited in the report as the largest near-term risk in the firm’s
view, and understandably so. That regulatory risk may be
exacerbated with stablecoins, however the report noted that despite
less liquid reserves (which could lead to heightened regulatory
scrutiny), stablecoins are “a waiting zone between fiat currencies
and digital currencies, which could further accelerate adoption of
the latter.” The report adds that central bank digital currencies
(CBDCs) are a “when, not if” situation. Bank of America only began
it's crypto division earlier this year, however the banking
behemoth has already released a bullish report on the crypto
market. | Source: NYSE: BAC on TradingView.com Related Reading |
Grayscale Report Shows The Good, The Bad, And The Ugly Of The
Cardano Network Close The Curtain In summary, we’re watching it all
unfold in real time. The report states that over 20M U.S. adults
own digital assets (roughly 14%) while an additional 19M+ plan on
buying digital assets sometime this year. However, rising interests
are just limited to individuals, but also live within corporations.
Furthermore, growth in ownership, interest, etc. doesn’t stop or
start with Bitcoin. Bitcoin has amassed one of the largest market
values on the planet, and in this case is the rising tide that is
lifting altcoin boats. The BofA report dives into Twitter mention
analysis, which showed that Bitcoin mentions decreased year-to-date
(as of August) while many altcoin mentions increased. In the
meantime, Bitcoin volatility has decreased relative to the early
years, as increased adoption leads to more “diamond hands.”
Additionally, CBDCs are on the horizon. Bank of America
approximates that countries encompassing roughly 90% of global GDP
are reportedly exploring CBDCs. Meanwhile, engagement in NFTs and
DeFi products are increasingly rapidly as well. While acknowledging
regulatory hurdles that the market will need to overcome, the BofA
report doesn’t shy away from difficult topics either. Illicit
activity with crypto has been a staple for bears, however BofA
notes that digital assets associated with illegal activities have
been cut in half compared to 2019. In all, BofA is admittedly
optimistic looking forward. As more traditional finance operations
come to terms with crypto’s role across a variety of industries,
adoption is only set to increase. Fasten up and hold on to your
seats. Related Reading | SEC Chair Gensler: SEC Will Not ‘Ban’
Crypto Featured image from Pexels, Charts from TradingView.com
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