Bank of America Bullish on Crypto; “Too Large to Ignore”
Bank of America is looking rather bullish on the long-term prospects of cryptocurrency. The bank has published a research report on Monday, October 4, asserting that crypto’s market cap of over $2 trillion is just “too large to ignore”. The report further details the entire digital asset industry and reveals the innovation coming from decentralized finance (DeFi) and nonfungible tokens (NFT).
The report asserts that the cryptocurrency sector’s $2.15 trillion market cap is “too large to ignore,” highlighting that the digital asset ecosystem has evolved to encompass “so much more” than just Bitcoin.
The crypto sector is further characterized as “tokens that act like operating systems, decentralized applications (DApps) without middlemen, stablecoins pegged to fiat currencies, central bank digital currencies (CBDCs) to replace national currencies, and non-fungible tokens (NFTs) enabling connections between creators and fans.” In addition. it notes:
“For us, digital assets are not about payments per se. They’re about a new computing paradigm, a programmable computer that is accessible everywhere and to anyone and owned by millions of people globally.”
The report touches the recent surge of crypto adoption in just a year’s time. As of June this year, 221 million users globally had traded crypto or been using the blockchain technology, versus 66 million in May 2020.
Furthermore, venture capital in the crypto space has significantly increased in 2021. The report shows that in the first half of 2021 over $17 billion was invested, which is triple the amount of investment for the entire 2020 year. Commenting on the adoption rate, the report reads:
“The applications built on this new software architecture appear to be growing more quickly than past technologies… Anyone in a network can establish a process (application or project) that provides consistency and trust.”
When it comes to the rise of NFTs this year, the report warned that there are risks involved in the sector, saying that “heightened risks in this segment needs to be fully understood before NFTs can achieve true adoption.”
Nevertheless, Bank of America acknowledged the unique and innovative nature of the NFT space and noted that the surge of interest in the sector has even surpassed veteran crypto traders’ expectations.
Previously, the bank said to be positive about El Salvador’s recognition of Bitcoin as legal tender, noting it could streamline remittances, promote financial digitization, provide consumers with greater choice.
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Author: Peter Siu