Bank of America has published its report “Digital Assets Primer: Only the first inning,” led by Alkesh Shah, head of Global Cryptocurrency and Digital Asset Strategy, providing an in-depth analysis of the current state of the blockchain industry from cryptocurrencies to DeFi and NFTs.
The report says that the industries of cryptocurrencies and decentralized finance services have grown to the point of being “too large to ignore.”
BofA’s researchers note that nearly 221 million users have exchanged cryptocurrencies or used a DeFi service, with a steady growth. Similarly, the increased participation of institutional investors is a clear indication that cryptocurrencies are much more than a passing phenomenon driven by retailers.
Bank of America is Bullish About The Crypto Space Beyond Bitcoin
Bank of America highlights that during the first half of 2021 the DeFi ecosystem received close to $17 billion in funding from institutional investors, this contrasts with the $5.5 that was recorded during 2020. Similarly, mergers and acquisitions in the crypto space rised from $940 million in 2020 to $4.2 billion in 2021.
In an official PR, Alkesh Shah maintained an agnostic stance, asserting that there is more to cryptocurrencies than Bitcoin
“Bitcoin is important, but the digital asset ecosystem is so much more. Our research aims to explore the implications across industries including finance, technology, supply chains, social media and gaming.”
The team also asserts that the way we interact with the world could change radically with the advent of blockchain technologies:
“In the near future, you may use blockchain technology to unlock your phone; buy a stock, house or fraction of a Ferrari; receive a dividend; borrow, loan or save money; or even pay for gas or pizza,”
Bank of America also highlighted that the growth of NFTs was a surprise for everyone. Researchers emphasized their fear that the large valuations of some NFT pieces such as fractionalized artworks or the NFTs from the crypto game Loot could be a bubble that affects many investors who do not know the risks they are exposed to.
Different Times, Different Stance
This stance contrasts sharply with earlier reports in which Bank of America described bitcoin as volatile, impractical and of little use as a store of value.
As recently as March 20201, Bank of America released a report assuring that bitcoin’s rise to $60,000 was essentially driven by speculation and not by the cryptocurrency’s inherent advantages:
“Broadly, we find that bitcoin has not been particularly compelling as an inflation hedge as commodities and even equities provide better correlation to inflation.
As such, we think the main portfolio argument for holding bitcoin is not diversification, declining volatility, or inflation protection, but rather sheer price appreciation, a factor that depends exclusively on bitcoin demand outpacing supply on a forward basis.”
But after the surge, Bank of America followed in the footsteps of other banks and founded a research group dedicated exclusively to covering the area of cryptocurrencies and the blockchain industry, gradually beginning to change its treatment of these emerging businesses.
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