Bitcoin has been in a “down and out” rut lately due to various factors, plunging 28% since this week. In its latest report on Thursday, Deutsche Bank compared bitcoin to a fad and responded to the world’s largest cryptocurrency’s previous surge and plunge by saying “fads are the last stage before kitsch.
In the report, Deutsche Bank analyst Marion Labouré wrote, “What holds true for glamour and style may also hold true for bitcoin. Just as fashion can suddenly go out of fashion, we have just received evidence that digital currencies could soon be a thing of the past.”
“One tweet and one Chinese government statement made this cryptocurrency obsolete.” She added.
Labouré further explained that a single tweet from Musk about a moratorium on bitcoin car purchases sent the price of bitcoin below $48,000, and then on Tuesday, it fell below $40,000 for a time, hitting its lowest record since January, as China’s central bank reiterated that it would ban digital tokens as a means of payment.
Labouré notes that Bitcoin’s $1 trillion market cap makes it impossible to ignore it, but Bitcoin’s limited utility in trading means “the real debate is whether the mere rise in valuation, or its illiquidity, is a barrier to Bitcoin’s evolution into an asset class.”
That’s why Labouré says “the value of bitcoin is based on pure wishful thinking. “Bitcoin’s value will continue to rise and fall depending on what people think it’s worth,” a phenomenon that Labouré calls the “Tinker Bell effect,” because belief is crucial.
Pressure from Central Banks
Labouré points out that no currency can escape the control of central banks. In particular, central banks and governments could start regulating cryptocurrencies early next year and possibly launch their own digital currencies, such as the Federal Reserve or the Chinese central bank.
Federal Reserve Chairman Jerome Powell (Jerome Powell) believes that digital currencies are complementary to the U.S. dollar and only that, and that any move by the Fed will affect the cryptocurrency market. And in China, the government is taking more aggressive steps against bitcoin to create space for its own digital currency.
Deutsche Bank believes that the strength of central banks in regulating cryptocurrencies is easily seen in the experience of Libra, a future global currency announced by Facebook in 2019, which led to less government control over the supply of the currency and drew the attention of regulators on all sides. Since then, Facebook has had to adjust its plans for its digital currency.
“The product is now focused on reducing the cost of payments, rather than competing with governments and central banks by creating a parallel payment method. In other words, Facebook does not intend to create a currency that competes with the U.S. dollar; instead, they want to compete with traditional dollar-based payment methods,” Labouré wrote.
She argues that this may be the best way to look at cryptocurrencies – not as a speculative asset, but as a fintech solution for faster and cheaper global payments.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/deutsche-bank-bitcoins-value-depends-entirely-on-peoples-wishful-thinking/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.