Citi analysts tout Bitcoin as the preferred currency for international trade

bitcoin

Citi analysts have said that Bitcoin is at a “tipping point” and could in the future become the preferred currency for international trade or face a “speculative implosion.”

With the recent embrace by the likes of Tesla Inc and Mastercard Inc, bitcoin could be at the start of a “massive transformation” into the mainstream, Citi said in a report.

The growing involvement from institutional investors in recent years contrasts with heavy retail-focus for most of the past decade, it added.

If businesses and individuals gain access via digital wallets to planned central bank digital cash and so-called stablecoins, bitcoin’s global reach, traceability and potential for quick payments would see it “optimally positioned” to become the preferred currency for international trade, Citi said.

Bitcoin, designed as a payment tool, is little used for commerce in major economies, hampered by high volatility and relatively costly transactions.

Still, it has over the past year gained traction in some emerging markets such as Nigeria.

Still, shifts in the macro-economic environment may also make the demand for bitcoin less pressing, it added.

The recent surge in interest in bitcoin, sparked by a narrative that it can act as a hedge against inflation, has driven the cryptocurrency to a record high of $58,354 and a $1 trillion market capitalisation.

But it has pulled back more than $11,000 from those levels in the last week on questions over the sustainability of such high prices.

Bitcoin was trading 4.5% higher at $47,284 on Monday, up over 60% so far this year.

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