Investment Banks Changing The Bitcoin Narrative
Investment banking giant, Deutsche Bank is the latest financial institution to change the Bitcoin narrative.
Deutsche Bank is the latest banking giant to change its Bitcoin narrative after a report from the German financial institution was released saying investors were increasingly demanding to use Bitcoin instead of gold to hedge against risk and inflation.
The report, compiled by Deutsche Bank research strategist Jim Reid, discussed the potential performance of several investments post-vaccine news.
The research strategist detailed the performance of Bitcoin since the vaccine news versus that of precious metals, pointing out investors were beginning to realize the credibility of Bitcoin.
‘One of the oddities has been the dramatic divergence between gold (-3.6%) and silver (-4.4%) on the one hand and Bitcoin (+13.4%) on the other,’ said Reid. ‘There also seems to be an increasing demand to use Bitcoin where gold used to be used to hedge dollar risk, inflation and other things.’
‘Bitcoin is up another +3% overnight and seems to be creating momentum of its own. It’s up over 70% over the last six weeks as more and more investors are starting to see it emerge as a credible asset to invest in.’
The Bitcoin Narrative Is Changing
It’s more about turning from the major investment banks as the Bitcoin narrative naturally turns bullish.
Earlier this week Citibank released a technical analysis report titled “Bitcoin: 21st Century Gold.” The report, which was leaked on Twitter, predicts the Bitcoin price possibly reaching $318k by December 2021.
The report was compiled by Citibank executive Tom Fitzpatrick, who analyzed the Bitcoin price long-term trend, stating it had had ‘unthinkable rallies followed by painful corrections.’
Fitzpatrick pointed out the bear markets of the past had mirrored each other of around 12 months, meaning we are now ‘in the middle of a bull run that began in early 2019 and could run for four years until late 2022.’
An extended bull run of that magnitude would lead to a Bitcoin price of around $318k, eclipsing the prediction of PlanB’s stock-to-flow, which has a price top of around $288k.
Fitzpatrick acknowledged the remarkable prediction, but stressed even at a Bitcoin to USD $318k price, it would pale in size to Bitcoin’s previous runs up.
‘If the Bitcoin price reaches this target, it only be a low to high rally of 102 times (the weakest rally so far in percentage terms) at a point where the arguments in favor of Bitcoin could well be at their most persuasive ever,’ said the Citibank executive.
Even JP Morgan Is Turning Bullish on Bitcoin
And more evidence the large banks are doing a u-turn on the Bitcoin narrative came from a JP Morgan’s report earlier this month.
The bank’s CEO famously called Bitcoin a “fraud” in the past is now detailing Bitcoin’s rise against gold, and how institutional investors were moving out of gold ETFs and into Bitcoin via Grayscale Bitcoin Trust (GBTC).
The report which was compiled and published by the JP Morgan Global Market Strategy Team, said the rise of Grayscale (GBTC) was evidence that demand for Bitcoin wasn’t just from Millenials, ‘but also institutional investors such as family offices and asset managers.’
The report compared the October flow trajectory for GBTC and the equivalent flow trajectory for gold ETFs, and stated the evidence showed that ‘some investors that previously invested in gold ETFs, such as family offices, may be looking at Bitcoin as an alternative to gold.’
The Bitcoin Narrative Is Changing Right On Cue
In years gone by, banks have defamed Bitcoin regularly, and have closed down many customers’ accounts for trading in the leading cryptocurrency.
It was all expected, and their ‘Blockchain not Bitcoin’ narrative was another mantra used to slow the rise of Bitcoin adoption.
It worked for a shortwhile, but banks understand the potential and want to gain from Bitcoin more than anyone. And from the start of 2021, banks in the US can offer Bitcoin custody and other services.
Raoul Pal calls it ‘a green light for prime brokerage and hedge funds.’ The macro strategist says ‘a wall of money is coming to the space’ and will mostly come through the banks.
So the Bitcoin narrative is turning positive at a very “coincidental” yet pivotal moment, and the bull market is only just getting going.
