Bank of America has published its Digital Asset Primer: Only Round One, led by Alksh Shah, Head of Global Cryptocurrency and Digital Asset Strategy, providing an in-depth analysis of the current state of the blockchain industry from cryptocurrencies to DeFi and NFTs.
The report says that the cryptocurrency industries and decentralized finance services have grown to a degree “too much to ignore.”
BofA researchers note that nearly 221 million users have either exchanged cryptocurrency or used a DeFi service, with steady growth. Likewise, the increased participation of institutional investors is a clear indication that cryptocurrencies are much more than a passing phenomenon led by retail traders.
Bank of America Optimistic About Crypto Space Outside Bitcoin
Bank of America highlights that during the first half of 2021, the DeFi ecosystem received nearly $17 billion in funding from institutional investors, which contrasts with the $5.5 that was recorded during 2020. Similarly, crypto mergers and acquisitions rose from $940 million in 2020 to $4.2 billion in 2021.
In official public relations, Kish Shah maintained a neutral stance, asserting that cryptocurrency is more than bitcoin
“Bitcoin is important, but the digital asset ecosystem is much more than that. Our research aims to explore the implications across industries including finance, technology, supply chains, social media, and gaming.”
The team also stresses that the way we interact with the world could fundamentally change with the advent of blockchain technologies:
“In the near future, you can use blockchain technology to unlock your phone; buy shares, a house, or part of a Ferrari; get profits by borrowing, lending, or saving; or even paying for gas or pizza,”
Bank of America also highlighted that the growth of NFTs came as a surprise to everyone. The researchers confirmed their fear that large valuations of some NFT pieces such as fragmented artwork or NFTs from the crypto game Loot could be a bubble affecting many investors who don’t know the risks they are taking.
Different times, different attitude
This position contrasts sharply with previous reports in which Bank of America described bitcoin as volatile, impractical, and of little use as a store of value.
Most recently in March 2020, Bank of America released a report confirming that Bitcoin’s rise to $60,000 was primarily driven by speculation rather than the inherent advantages of the cryptocurrency:
“Overall, we found that bitcoin was not particularly compelling as an inflation hedge, where commodities and even stocks provide a better correlation to inflation.
As such, we believe that the main portfolio argument for holding bitcoin is not diversification, reduced volatility, or inflation protection, but rather a surge in prices, a factor that depends exclusively on bitcoin demand outweighing supply on a forward basis.
But after the boom, Bank of America followed in the footsteps of other banks and created a research group dedicated exclusively to covering the cryptocurrency and blockchain industry, and gradually began to change its approach to these startups.
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