March 28, 2024

BofA: cryptocurrencies on the cusp of recognition, adoption and growth

This week, Bank of America's research arm released a report on prospects and trends.development of cryptocurrencies, highlighting the new qualities that these tools bring to the financial world. According to the bank, the world is at the very beginning of a 30-year period of implementation of blockchain technologies.

So, last year in the income statement only 17companies mentioned “digital assets”, while in 2021 their number increased to 147; and the number of crypto users during this time increased from 66 million to 221 million people.
BofA: cryptocurrencies on the cusp of recognition, adoption and growth

Image Source:BofAGlobalResearch

The largest growth is observed in the segmentdecentralized finance (DeFi) and non-fungible tokens (NFT). In 2020, NFT sales reached $ 0.25 billion, and as of August 2021 - already $ 3 billion. The DeFi market grew from $ 19 billion to $ 90 billion in a year. The main beneficiary was Ethereum smart contracts, which continue to hold the lead, despite on the emergence of promising competitors. ETH's annual growth is over 900%.
BofA: cryptocurrencies on the cusp of recognition, adoption and growth

Image Source: Cryptocurrency ExchangeStormGain

Bitcoin has a different architecture and cannotparticipate in the NFT and DeFi rally, but it is increasingly viewed as digital gold. BofA notes that over the past 5.5 years, Bitcoin has been better correlated with inflation than gold (implicitly inversely proportional). However, the observation history is not enough for statistically correct conclusions.
BofA: cryptocurrencies on the cusp of recognition, adoption and growth

Image Source:BofAGlobalResearch

In 2020, the Fed and the government began to activelysupport the American economy by pumping trillions of dollars into the markets. Fearing against the approaching inflation, institutional investors began to invest in cryptocurrencies. They are responsible for the Bitcoin rally, which has risen to $60,000 this year.
BofA: cryptocurrencies on the cusp of recognition, adoption and growth

Image Source:BofAGlobalResearch

With US real estate growing by 20% year on year and energy costs more than doubling, price increases will continue to climb and demand for Bitcoin will increase.

The main risks for BofA investors are seen as high volatility and regulatory pressure. However, with an increase in capitalization, Bitcoin's volatility decreases.
BofA: cryptocurrencies on the cusp of recognition, adoption and growth

Image Source:BofAGlobalResearch

Regarding regulation, not everything is clear:if you do not follow the Chinese scenario, then bringing the "Wild Cryptocurrency West" to a civilized form will only increase its investment attractiveness. Jerome Powell recently spoke of the Fed's reluctance to ban cryptocurrencies, but noted the need to regulate the release of stablecoins and the DeFi market. This increases the likelihood of the BofA forecast being fulfilled, and we are indeed at the beginning of a 30-year growth cycle.

 

Analytical group StormGain

(platform for trading, exchanging and storing cryptocurrency)