Bank of America: Bitcoin’s only value is its price rise

Bitcoin is useless as a store of value or a means of payment. The only reason to own the first cryptocurrency is its rising price, writes Cointelegraph, citing a Bank of America analyst’s report.

One of the authors of the report “Bitcoin’s dirty little secrets” [Bitcoin’s dirty little secrets] Francesco Blanch noted that Bitcoin cannot serve as a safe-haven asset, because it is not tied to inflation and is highly volatile.

“The main argument in favor of holding bitcoins is not diversification, stable returns, or inflation protection, but rather pure price appreciation — a factor that depends on demand for Bitcoin outpacing supply,” Blanch says.

He noted that about 95% of Bitcoin is held by holders of 2.4% of wallets — a potential obstacle to broad cryptocurrency adoption.

“The fact that the majority of bitcoins are held in such a small number of accounts makes this instrument impractical as a payment mechanism or investment vehicle.”

Among other obstacles to wide Bitcoin adoption, Bank of America cites the low transaction speed of the payment network and the high energy consumption of mining farms.

Analysts estimate that cryptocurrency production emits around 60 million tonnes of carbon dioxide annually, and each Bitcoin purchase of $1 billion is equivalent to the annual emissions of 1.2 million cars.

Analysts did not rule out that in the future Bitcoin could face competition from central banks developing own digital currencies.

Bank of America also expressed concerns about Bitcoin’s high volatility relative to foreign currencies, gold, and silver.

“Even after ten years on the market and serious episodes of price appreciation, Bitcoin has not achieved any definite price stability,” the report says.

As reported by Bank of America, a December 2020 survey of asset managers found that the Bitcoin long position was among the top market themes.

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