Investment

Bank of America claims that a 1% move in the price of bitcoin costs only $ 93 million

Now the infamous research bank Bank of America slamming Bitcoin also includes research that suggests that only a $ 93 million tide is needed to shift the price of bitcoin by one percent.

“Bitcoin is extremely sensitive to increased demand for dollars,” he said a note written by Bank of America strategist Francisco Blanch, with contributions from Philip Middleton and Savity Subramanian.

The analysis found that tides of at least $ 2 billion will be needed to shift the price of gold by a single percentile, while more than $ 2.25 billion will be needed to exert the same price impact on government bonds plus 20 years.

“We estimate that a net inflow of only $ 93 million in bitcoins would increase the price by 1%,” the report concludes, adding:

“What has put tremendous pressure on the growth of bitcoin prices in recent years, especially in 2020?” The simple answer: a modest inflow of capital. “

With a bitcoin market cap of nearly $ 1.1 trillion, it equals roughly 10% Of gold, research suggests that bitcoins are twice as volatile as gold inflows per dollar despite an asset that has existed for nearly a dozen years.

Bank of America researchers attribute the small cost of shifting the price of bitcoins to large-scale whale hoarding, which reduces the number of coins available for stock exchange purchases. “Looking at the detailed blockchain records, we found that the largest addresses have not been sold in aggregate since the beginning of the pandemic,” they said.

Bank of America’s claims appear roughly in line with the findings of the cryptanalytic firm Glassnode, which estimated this. 78% Bitcoin supply was illiquid as of December 2020, so only 20% of the circulating supply was available for trading on stock exchanges.

With the number of new entities active in the bitcoin network it increased to unprecedented level, a growing number of investors compete for a shrinking BTC stock, resulting in a sharp rise in demand that raises prices easily.

Earlier this month, Glassnode estimated it 95% of BTCs traded last moved on-chain in the last three months, which further proves whales hide their coins from a long-term point of view. The co-founders of “Jan & Yann” tweeted:

Despite Bank of America’s finding that it appears to support BTC’s Glassnode case, the report took a very negative tone regarding bitcoins overall – blocking the cryptocurrency as a volatile, polluting “Impractical” means of payment.


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