LONDON (Reuters) – Bitcoin rose nearly 6% on Monday as risky assets recovered after last week’s bond route cooled, and Citi said the most popular cryptocurrency was at a “tipping point” and could become the currency of choice for international trading .
With the recent embrace of Tesla Inc and Mastercard Inc, Bitcoin could be the start of a “massive transformation” into the mainstream, Citi added.
Bitcoin, which rose from $ 4,700 to $ 47,000 last March, could become the preferred currency for international trade in the future or face a “speculative implosion,” the investment bank said.
It was up 5.7% to $ 47,834 from 1127 GMT on the Bitstamp exchange. Smaller rival ether was up 7.5% to $ 1,525.
Bitcoin’s recent performance is due to the growing involvement of institutional investors in recent years, as opposed to its large focus on retail investors for most of the past decade, Citi added.
If businesses and individuals were given access to central bank planned digital cash and so-called stablecoins through digital wallets, bitcoin’s global reach, traceability and rapid payment potential would see it “optimally positioned” to become the preferred currency for international trade. become, Citi said.
Designed as a payment tool, Bitcoin is rarely used for trading in large economies, hampered by high volatility and relatively expensive transactions. Still, it has gained traction in some emerging markets over the past year, such as Nigeria.
Such a dramatic transformation from bitcoin to the de facto currency of world trade – a status currently held by the dollar – would depend on changes in the marketplace to allow for wider institutional participation and closer supervision by financial regulators, said Citi.
Still, shifts in the macroeconomic environment could also make bitcoin demand less urgent, it added.
The recent surge in interest in bitcoin, fueled by a narrative that it could serve as a hedge against inflation, has propelled the cryptocurrency to a record high of $ 58,354 and a market cap of $ 1 trillion.
But it has pulled more than $ 11,000 from those levels in the past week due to questions about the sustainability of such high prices.
“There are numerous risks and obstacles to Bitcoin’s progress,” Citi’s analysts wrote. “But weighing these potential hurdles against the odds leads to the conclusion that Bitcoin is at a tipping point.”
(Image: Bitcoin’s rise from the March lows 🙂
Reporting by Thyagaraju Adinarayan and Tom Wilson; Editing by Hugh Lawson