The already infamous Bank of America study notes that Bitcoin’s dominance also contains studies showing that inflows only need $ 93 million to drive Bitcoin’s price up one percent.
“Bitcoin is very sensitive to the increased demand for the dollar,” says a memo written by Francisco Blanche, Bank of America strategist, featuring Philip Middleton and Savita Subramanian.
The analysis showed that it would take at least $ 2 billion in inflows to raise the price of gold by one percentage point, while more than $ 2.25 billion would be required to have the same price effect over 20 years in addition to government bonds.
“A net addition to bitcoins of just $ 93 million would result in a 1% price increase,” the report said, adding:
“What has caused the tremendous upward pressure on bitcoin prices in recent years, especially in 2020? Simple answer: modest capital inflows. ”
With Bitcoin’s market capitalization of about $ 1.1 trillion, the equivalent of roughly 10% of gold, research shows that Bitcoin is twice as volatile as the flow of gold to the dollar, despite the asset having been around for nearly twelve years.
Bank of America researchers attribute the small cost required to convert the price of bitcoins to a large swarm of whales, which reduces the number of currencies available for purchase on exchanges. “If we look at the detailed blockchain records, we find that the largest addresses have not been sold together since the start of the pandemic,” they said.
Bank of America’s statements are largely in line with the findings of cryptanalyst firm Glassnode, which estimates that 78% of Bitcoin’s offerings were illiquid as of December 2020, resulting in only 20% of traded supply being available for trading on exchanges.
As the number of new devices active on the Bitcoin network increases to unprecedented levels, an increasing number of investors compete to scale down BTC, easily increasing demand.
Earlier this month, Glassnode calculated that 95% of BTC trades last moved into the chain in the last three months, which also indicates that whales are creating their long-term coins. Company founders Yang Weian tweeted:
Even though Bank of America found support for the Glassnode BTC nonsense, the report made a very negative tone towards Bitcoin in general, and cryptocurrencies turned into an unstable, polluted and impractical method of payment.