Thread by @PriapusIQ

🤖 JPM | on #Bitcoin and Crypto: Bitcoin is an economic side show – the rise of digital finance is the real post-COVID-19 story

1/

🔹 Fintech has gone mainstream, and we highlight the rise of digital finance in the COVID-19 era in our annual review of blockchain technology, #Bitcoin and other digital currencies.

2/

🔹 #Bitcoin prices have continued their meteoric rise with Tesla, BNY Mellon and Mastercard’s announcements of greater acceptance of cryptocurrencies...

3/

🔹 ...but fintech innovation and increased demand for digital services are the real COVID-19 story with the rise of online start-ups and expansion of digital platforms into credit and payments.

4/

🔹 Expect ‘co-opetition’ between ‘Fin’ and ‘Tech’ players with banks focused on narrowing the technology gap, while Big Tech benefits from a large customer base and access to their data.

5/

🔹 Investor and regulatory shifts will play out as Big Tech looks to issue Global Stablecoins (GSCs) and regulation has been outpaced by innovation, creating an uneven playing field.

6/

🔹 Traditional banks could emerge as endgame winners in the digital age of banking due to their advantage from deposit franchise, risk management and regulation.

7/

🔹 #Bitcoin prices boosted by momentum traders, but current prices are well above our most recent estimates of fair value based on mining costs and risk capital equivalence with gold.

8/

🔹 In the long term, we estimate that theoretically #Bitcoin prices would need to rise to $146k for the market cap to match the total private sector investment in gold via ETFs or bars and coins.

9/

🔹 Crypto assets rank as the poorest hedge for major drawdowns in Equities, and diversification benefits are unclear at prices so far above production costs, while increased ownership is raising correlations with cyclical assets.

10/

🔹 Watch the tail risk to #Bitcoin markets as a sudden loss of confidence in USDT would likely generate a severe liquidity shock, jeopardizing access to the largest pools of demand and liquidity.

11/

🔹 Some central banks are likely to issue Central Bank Digital Currencies (CBDC) in the next 3 years but transformative impact is still questionable given restrictions based on jurisdiction.

/End.