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Deutsche Bank: Bitcoin is a ‘Digital Diamond’

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The analysts at Deutsche Bank anticipate that Bitcoin‘s price will hit $28,000 by the end of the year. According to research done by Deutsche Bank, Bitcoin is more comparable to diamonds, which are highly dependent on marketing, than it is to gold, which is an asset that is considered to be a safe haven. The article stated that the argument for Bitcoin as digital gold has been demolished due to the fact that the most prominent cryptocurrency has seen losses of more than fifty percent so far in 2022.

Is There Still an Attitude That Bitcoin Is Digital Gold?

The dominant cryptocurrency is sometimes referred to as “digital gold” by cryptocurrency experts and Bitcoin supporters, and there is a solid reason for this. Despite its wild volatility in the short term, Bitcoin has historically been a winner in the long run. This is despite the fact that its price is very volatile in the short term.

Nevertheless, Bitcoin, along with other risk assets, has had a bad performance so far this year despite the skyrocketing prices and increasing geopolitical unpredictability. The strong strategy taken by the Federal Reserve to bring inflation under control has also worked as a drag on the major cryptocurrency.

As this article is being written, the price of Bitcoin has risen above the critical psychological barrier of $21,000. This is an increase of more than 4 percent over the course of the past 24 hours. The most prominent cryptocurrency has also lost 58.8 percent of its value since the beginning of the year, significantly underperforming gold, which has only lost 0.79 percent since the beginning of the year.

All of this may point to the conclusion that Bitcoin has failed to live up to its potential as a safe haven or digital gold. Taking this into consideration, analysts at Deutsche Bank named Marion Laboure and Galina Pozdnyakova have argued that Bitcoin should be considered a “digital diamond.” The two individuals contended that diamonds, another item that is heavily promoted, are comparable to Bitcoin in that both rely heavily on marketing.

They compared Bitcoin to De Beers, the most successful diamond corporation in the world, which in the late 1950s spearheaded an advertising campaign that would go on to become a cultural icon and change the diamond industry. They stated that:

“By marketing an idea rather than a product, they built a solid foundation for the $72 billion-a-year diamond industry, which they have dominated for the last eighty years. What’s true for diamonds, is true for many goods and services, including Bitcoins.”

The price of bitcoin is projected to end the year at $28,000.

The analysts at Deutsche Bank anticipated that the price of Bitcoin, which has been increasingly tied to benchmarks such as the S&P 500 and the tech-heavy Nasdaq 100, may return to $28,000 by the end of the year. This is because they believe that the S&P will return to the levels it had in January before the end of the year, and they believe that Bitcoin will probably follow the index.

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Notably, the financial analysts at JPMorgan believe that the current phase of deleveraging in the cryptocurrency market will end in the near future. They stated that it should not come as a surprise that certain leverage crypto firms are collapsing in the wake of the current market meltdown, and they added that the liquidity crunch at hedge fund Three Arrows Capital “is a reflection of this deleveraging process.” They stated that:

“The current deleveraging cycle may not be very protracted [given] the fact that crypto entities with the stronger balance sheets are currently stepping in to help contain contagion [and that venture-capital funding], an important source of capital for the crypto ecosystem, continued at a healthy pace in May and June.”

According to the analysts at JPMorgan, their net leverage meter, which is an indication that evaluates the capacity to borrow money, implies that “deleveraging is already well progressed,” which indicates that the worst is now behind cryptocurrency.

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