LONDON (Reuters) – Bitcoin rose nearly 6% on Monday as risk assets rallied after last week’s bond routine cooled and Citi said the most popular cryptocurrency was at a point of inflection and that it could become the preferred currency for international trade.
With the recent embrace of Tesla Inc and Mastercard Inc, Bitcoin could be at the beginning of a “massive transformation” into mainstream, Citi added.
Bitcoin, which has risen to $ 47,000 from $ 4,700 last March, could become the preferred currency for international trade in the future or face a “speculative implosion,” the investment bank said.
It rose 5.7% to $ 47,834 from 1127 GMT on the Bitstamp stock exchange. The smallest rival ether rallied 7.5% to $ 1,525.
Bitcoin’s recent performance has come with the growing participation of institutional investors in recent years, which contrasts with its strong focus on retail investors for most of the last decade, Citi added.
If companies and individuals access through digital portfolios the planned central bank digital cash and so-called stable, the global reach, traceability and potential of fast payments of Bitcoin would see it “optimally positioned” to convert. be in the preferred currency for international trade, Citi said.
Bitcoin, designed as a payment tool, is rarely used for trading major economies, difficulty due to high volatility and relatively expensive transactions. However, over the past year it has gained strength in some emerging markets such as Nigeria.
Such a dramatic transformation for bitcoins into the de facto world trade currency (currently a dollar state) would depend on changes in its market to allow for wider institutional participation and closer oversight by financial regulators, Citi said.
However, changes in the macroeconomic environment may also make the demand for bitcoins less urgent, he added.
The recent rise in interest in bitcoin, sparked by the narrative that it can act as a hedge against inflation, has brought the cryptocurrency to a record high of $ 58,354 and a market capitalization of $ 1 trillion.
But it has withdrawn more than $ 11,000 from those levels last week on questions about the sustainability of such high prices.
“There are a lot of risks and obstacles that hinder Bitcoin’s progress,” Citi analysts wrote. “But weighing these possible obstacles with opportunities leads to the conclusion that Bitcoin is at a turning point.”
(Chart: Bitcoin rise since March lows 🙂
Reports by Thyagaraju Adinarayan and Tom Wilson; Edited by Hugh Lawson