Bitcoin could be at the start of a “massive transformation” into mainstream finance usage, to become the “preferred currency” of global trade, or face implosion, according to analysts from Citi investment bank.

In an in-depth report into cryptocurrencies, Citi observed a major change in Bitcoin, from “primarily a retail-focused endeavour”, to something that appeals to “institutional investors” searching for higher returns and alternative assets.

According to the report, Bitcoin is at a “tipping point”, and if businesses and individuals gain access to alternative digital currencies, such as stable coins, or central bank offerings, then Bitcoin could see its use for commerce widen dramatically.

The investment bank also acknowledges the endorsement of Bitcoin by the likes of Tesla and Mastercard has lent the currency a sheen of legitimacy. 

According to the analysts, Bitcoin also appeals because it “is immune from both fiscal and monetary policy, avoids the need for cross-border foreign exchange (FX) transactions, enables near-instantaneous payments, and eliminates concerns about defaults or cancellations as the coins must be in the payer’s wallet before the transaction is initiated.”

However, the bank’s report also warned of a somewhat paradoxical situation, where increased acceptance of Bitcoin would bring about more regulation, which in turn would risk driving away some of its most innovative stakeholders.

“Many of the most innovative and talented developers may choose to withdraw from established platforms deploying more extensive oversight and monitoring”, it said.

The report comes in the wake of a record-breaking period for bitcoin and the cryptocurrency market as a whole.

At the start of the year, the cumulative worth of the crypto market as recorded by its market-cap exceeded $1 trillion (€820 billion) for the first time in its history. Barely a month later, individual bitcoin prices surmounted $50,000, meaning the combined value of bitcoin alone exceeded $1 trillion. 

Ultimately, Citi conceded that Bitcoin’s future is “unknowable” but forecasted that “developments in the near term are likely to prove decisive, as the currency balances at the tipping point of mainstream acceptance or a speculative implosion.”

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