The bitcoin price, after starting the year at around $30,000 per bitcoin, has doubled—soaring due to Wall Street institutional adoption and corporate interest from the likes of Tesla billionaire Elon Musk (and more buyers could be on the way).
Now, Deutsche Bank analyst and Harvard economist Marion Laboure has predicted “the next two or three years should be a turning point for bitcoin,” pointing to Tesla’s trajectory as a potential road map for bitcoin to “transform potential into results.”
“Bitcoin’s current valuation is pricing in a shift toward cross-border digital currencies; the hypothesis is that bitcoin, as the leader, will benefit from network effects and become an important means of payment in the future,” Laboure wrote in a report on the future of payments this week.
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However, Laboure expects the bitcoin price to “remain ultravolatile” and warns “a few additional large purchases or market exits could significantly impact the supply-demand equilibrium.”
Elon Musk’s electric car company Tesla impacted this equilibrium last month when it revealed it had bought $1.5 billion worth of bitcoin, sending the bitcoin price sharply higher. However, Laboure sees a deeper connection between the pair.
Both Tesla and bitcoin have followed a similar trajectory over the last year, and, according to Laboure, market sentiment toward Tesla “started to shift significantly in the last 18 months as Tesla delivered early results.”
“Tesla is five years older than bitcoin and has always sparked robust debates between people who see it as a soon-to-die fad and those who see it as the future of the car,” Laboure wrote, arguing a “consensus about [bitcoin’s] future may emerge as people monitor digital currency developments” over the next two or three years.
“In the long term, bitcoin, like Tesla, will have to transform potential into results to sustain its value proposition.”
Meanwhile, recent Wall Street adoption (including Morgan Stanley MS gearing up to offer wealthy clients the ability to invest in bitcoin funds and JPMorgan eyeing crypto clearinghouse options) has firmly pushed bitcoin onto the radar of the traditional financial industry.
“Once upon a time, established brokers, and banks wrote-off crypto as ‘too volatile’, refusing to recognize it as a legitimate asset-class in advice issued to investors,” Stephen Kelso, head of capital markets at ITI Capital, said in emailed comments.
“However, we’re also seeing a dramatic change in approach from institutional organizations, who increasingly see crypto investment as a relevant store of value against the rapidly accelerating debasement of fiat currencies.”