Is This the Moment of Truth for BTC?

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In Brief
  • Bitcoin (BTC) has reached a “tipping point,” according to a report from Citi.

  • Increasing adoption by institutional investors could see “massive transformation” for BTC.

  • On the other hand, BTC could face a “speculative implosion.”

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Bitcoin (BTC) has reached a “tipping point,” according to a report from Citi, says Reuters.

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According to the report, the flagship cryptocurrency, BTC, could become the preferred medium for international trade or face a “speculative implosion.”

In the last decade, bitcoin has predominantly been championed by retail investors. However, bitcoin has been increasingly seeing adoption on behalf of institutional investors, such as Tesla and Mastercard.

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This increasing institutional acceptance could lead to a “massive transformation” into the mainstream for BTC, Citi said. Such adoption has already seen BTC’s price rise tenfold from $4,700 in March 2020 to its current price of around $47,000.

BTC Optimally Positioned

According to the Citi report, wide-scale adoption of bitcoin would depend on mainstream finance’s acceptance of digital currencies and wallets. For instance, some central banks have intentions to issue digital currencies and stablecoins.

If these began appearing and individuals and businesses began using them via digital wallets, BTC would be “optimally positioned” to become the preferred currency for international trade, the report said. This is due to BTC’s already global reach, traceability, and capacity for quick payments.

However, for BTC to displace the dollar as the de facto currency of world trade, it would require market changes to enable broader participation and clearer oversight from financial regulators. Macroeconomic shifts could alter the demand for BTC in the meantime, the report added.

“There are a host of risks and obstacles that stand in the way of bitcoin progress,” Citi analysts wrote. “But weighing these potential hurdles against the opportunities leads to the conclusion that bitcoin is at a tipping point.”

Recent BTC Movements

February saw BTC breach the $50,000 threshold for the first time, peaking at $58,413 on Sunday, Feb. 21. Citi attributed this surge to the growing perspective that BTC can act as a hedge against inflation, an argument shared by MicroStrategy CEO Michael Saylor.

However, BTC’s price took a dive over the course of last week, hitting a low of $43,813 on Feb. 28. Citi analysts cite skepticism over the sustainability of such a high price level as the cause for the correction. Bitcoin is currently trading around $48,000.

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage. He can best be described as an optimistic center-left skeptic.

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