Bank of America, one of the world’s largest financial institutions, has publicly released a special report that summarizes the current state and perspectives about the crypto industry.
The bank published a special analytic report dubbed “Digital Assets Primer: Only the first inning,” with the help of a team of experts led by Alkesh Shah, head of Global Cryptocurrency and Digital Asset Strategy. Jointly, they provided an in-depth analysis of the current state of the blockchain industry, from cryptocurrencies to decentralized finance (DeFi) and nonfungible tokens (NFTs).
The report asserts that the industries within the crypto space and decentralized finance services have significantly grown to a point of being “too large to be ignored.”
BofA’s researchers conclusively noted that nearly 221 million users traded in cryptos or used DeFi services. In that context, the report cites increased participation of institutional investors, which indicates that cryptos are much more than the current speculative phenomenon driven by retailers.
Bank of America Seems Bullish On Crypto
The American multinational bank has outlined a considerable performance recorded in the first half of 2021, whereby the DeFi ecosystem garnered more than $17 billion in funding from institutional investors. This year’s gains contrast the 2021 performance that left the industry recording roughly $5.5 billion.
Similarly, mergers and acquisitions within the crypto space have massively grown from roughly $940 million in 2021 to $4.2 billion in 2021.
“Bitcoin is important, but the digital asset ecosystem is so much more. Our research aims to explore the implications across industries including finance, technology, supply chains, social media, and gaming.”
The team also said that the way people interact in the world could change radically with the launch of more advanced blockchain technologies:
“In the near future, you may use blockchain technology to unlock your phone; buy a stock, house or fraction of a Ferrari; receive a dividend; borrow, loan or save money; or even pay for gas or pizza.”
Bank of America has also acknowledged the recent growth of NFTs, which erupted as a surprise to everyone. Nonetheless, researchers have expressed their great fears over the large valuations of some NFT pieces.
They maintained that some NFTs options from various fractionalized artworks or the NFTs from crypto game loot could be a bubble that may affect most investors, who do not know the risk that comes with being exposed to it.
The Bank Changes Stance About Bitcoin
Although the Bank of America has maintained that it is bullish on crypto space beyond Bitcoin, this time around, the banking giant has reportedly confirmed taking a nuanced stance towards Bitcoin, which contradicts its earlier reports.
On several occasions, the Bank of America has described Bitcoin as volatile, impractical, and of little use as a store of value product.
In March 2021, Bank of America released a report that criticized Bitcoin’s bullish trends that left its price rising above the $60,000 level at the time. The bank argued that speculation pushed the Bitcoin price to its new all-time highs and not its inherent advantages:
“Broadly, we find that bitcoin has not been particularly compelling as an inflation hedge as commodities and even equities provide better correlation to inflation.
As such, we think the main portfolio argument for holding bitcoin is not diversification, declining volatility, or inflation protection, but rather a sheer price appreciation, a factor that depends exclusively on bitcoin demand outpacing supply on a forward basis.”
But after the surge, Bank of America followed in the footsteps of other banks. Reports emerged that the bank had started researching exclusively focusing on the area of cryptocurrencies and the blockchain industry. Gradually, it started to change its stance toward this emerging sector.
Currently, bitcoin has regained the $50,000 level and many analysts believe that another massive bullish wave is imminent which might push BTC towards $80,000.