In a scathing report, Bank of America says Bitcoin is 'impractical as a payments mechanism or even as an investment vehicle.'
Bitcoin is used to a bit of negative press, but a new report conducted by the Bank of America’s Global Research team named “Bitcoin’s Dirty Little Secrets” has shown that not all banks are willing to jump on the crypto bandwagon.
In the report released on Wednesday, BofA argued that the price increase Bitcoin has experienced is due to institutional investors pouring cash into the digital currency.
Following announcements made this year by some of the world’s largest banks, big-name companies and financial whales — who have all backed Bitcoin in some capacity — the price of BTC hit an all-time high of $61,683 on March 13.
Around the same date last year, Bitcoin was hovering around the $6,000 mark. Bank of America claims that the endorsement of Bitcoin from major financial players has pumped the price.
Majority of BTC Held by 2.4% of Addresses
One of the many revealing facts from the report showed that 95% of Bitcoin was held by the top 2.4% of addresses with the largest balances. BofA said:
"In our view, the fact that such a small percentage of Bitcoin accounts hold most of the BTC in circulation makes this instrument impractical as a payments mechanism or even as an investment vehicle. It can also create social and governance issues.”
Analysts behind the report found that the future pricing of Bitcoin was dependent on “demand outpacing supply.” Should more institutional investors make Bitcoin purchases, the price would continue to increase as, unlike the U.S. dollar, supply is limited and not subject to inflation.
With this in mind, BofA claims that a further $93 million poured into Bitcoin could trigger a 1% price increase. Comparing that with gold, the same price increase would need roughly $1.86 billion pumped in.
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