Citigroup Publishes Detailed Bullish Report On Bitcoin
Citigroup has published a detailed report on Bitcoin, discussing how it could ‘become the currency of choice for international trade’.
The 108-page Citigroup report titled Bitcoin – At A Tipping Point goes into detail about what makes it important, and emphasizes Bitcoin’s neutrality, and how its innovative design would be advantageous for the global payments system.
‘A focus on global reach and neutrality could see Bitcoin become an international trade currency,’ says the report. ‘This would take advantage of Bitcoin’s decentralized and borderless design, its lack of foreign exchange exposure, its speed and cost advantage in moving money, the security of its payments, and its traceability.’
In the report, the bank talks about how Bitcoin ‘is immune from both fiscal and monetary policy’ while negating the need for cross-border foreign exchange transactions, if Bitcoin is to achieve its capabilities and it gains mainstream adoption.
Bitcoin – An Inflation Hedge In Low Yielding Times
The Citigroup report mentions how Bitcoin has evolved from being primarily a retail-focused investment to something that is now attracting institutional investors looking for an inflation hedge.
It discusses at length how low yielding government bonds is driving institutional demand for Bitcoin and how companies like MicroStrategy, Tesla and PayPal are diversifying their portfolios and adding it to their balance sheet.
‘The intersection of low yields and inflationary expectations has increasingly fostered the institutional investor view that Bitcoin could represent an inflation hedge, a portfolio diversifier, and a safe haven not currently offered by traditional government bonds all at once.’
The Citigroup report also suggests how specific enhancements to Bitcoin’s exchanges, trading, data, and custody services are all driving institutional investors towards the space, and how the Bitcoin market is matured and completely different today.
‘Bitcoin at a Tipping Point?’ Citigroup Warns
However, the Citigroup report does warn that Bitcoin’s ‘future is still uncertain’ and that ‘developments in the near term are likely to prove decisive as the currency balances at the tipping point of mainstream acceptance or a speculative implosion.’
The report talks of obstacles persisting which means Bitcoin’s future ‘is by no means assured.’ It suggests upgrades in the Bitcoin marketplace such as regulations are necessary for ‘broad institutional participation’ to really kick in.
Ironically, if these upgrades are met the bank report suggests it could have an adverse effect on the Bitcoin network’s ‘anti-establishment ethos’ and possibly drive away the innovative crowd who hold that dear.
‘Such enhancements would move Bitcoin and the cryptocurrency space closer to the oversight and rules of traditional financial regulators,’ it suggests. ‘This in turn may cause many of the most innovative developers and entrepreneurs to exit the ecosystem, as it moves away from the anti-establishment ethos of Bitcoin’s roots.’
Citigroup Following The Trend
Citigroup’s 108-page report is the latest move from America’s biggest banks, who are turning bullish on Bitcoin, after news leaked about its competitors JPMorgan, Goldman Sachs and Morgan Stanley all having high level talks about Bitcoin.
And the report comes only 2 months after the bank downgraded MicroStrategy to a sale after CEO Michael Saylor announced it was going into debt to purchase Bitcoin.
But Citigroup’s about turn is part of a larger trend, and one that we should expect to gain pace after the likes of Shark Tank star Kevin O’Leary changed his opinion and is now holding a 3% portfolio exposure to Bitcoin.
Is it mismanagement, ignorance, or price manipulation? Probably a mix of the three, but Citigroup’s new bullish outlook is welcome all the same.