Bitcoin could play a bigger role in the global financial system if it moves from its retail-focused outlook to more of an institutional investor asset and stands out as the “compass” of crypto commerce, Citigroup strategists said in a report.
Bitcoin’s price has risen more than four-fold over the last 12-month to an all-time high of $58,000 on Feb. 21 and it hit a $1 trillion valuation, according to CoinDesk data. Buyers looking to hedge against inflation and big-name buy-ins such as Elon Musk, Jack Dorsey and Jay-Z ’s helped increase its adoption.
Proponents of the cryptocurrency have predicted bitcoin’s price could rise even more.
Citigroup has moved from referring to bitcoin as a “wannabe asset” in a 2014 report to fully backing the digital asset and seeing its potential in becoming the “North Star” in the crypto ecosystem — one that could include crypto exchanges, crypto banks, and new offerings in savings, lending, and borrowing.
“There is an increased chance bitcoin’s role in that future economy may expand once more, becoming potentially the currency used to facilitate global trade,” strategists for Citigroup Global Perspectives & Solutions said in the report.
“Its core innovations were the building blocks that launched this ecosystem and those innovations themselves are now being extended and levered in new ways that are remaking the world of commerce and finance.”
Citigroup’s bullish outlook helped bitcoin continue its recovery from a 21 percent dip after hitting it’s record high, rising to $50,000 on Tuesday.
Jemima Kelly, a journalist at the Financial Times, was critical of the Citigroup report, tearing into the six strategists and disputing their claims that 36 percent of small-to-medium companies are already accepting bitcoin within the U.S.
“… the entire 108 pages of Citi’s report are made up of readily disputed claims and absurd statistics which can be recycled from websites like 99bitcoins.com,” Kelly wrote.
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