A senior economist at Deutsche Bank predicts Bitcoin (BTC) will remain “ultra-volatile” for the foreseeable future.
Marion Laboure, who also works as a market strategist at the banking giant, says BTC could potentially become the 21st century gold down the road. At this point in time, Laboure says BTC’s high level of volatility keeps it from serving as an effective store of value, and she does not expect wild price swings to disappear any time soon for three reasons.
“I expect it to remain ultra-volatile in the foreseeable future. I see basically three reasons for this: first, about two-thirds of Bitcoins are used for investments and speculation. Second, due to its limited tradability, just a few additional large purchases or market exits can significantly impact the supply-demand equilibrium. Third, Bitcoin’s value will continue to rise and fall depending on what people believe it is worth. Small changes in investors’ overall perceptions about Bitcoin can have a large impact on its price.”
Looking at the rankings of crypto assets by market cap, Laboure says she doesn’t believe any other digital currency will surpass Bitcoin or Ethereum (ETH) in the next five years.
“It seems very unlikely to me, because of the network effect. Bitcoin enjoyed first-mover advantage and is now the most traded and well-known crypto-currency. And Ethereum has several real applications.”
The economist points to ETH’s ability to support decentralized finance (DeFi) and non-fungible tokens (NFTs).
“If Bitcoin is sometimes called ‘digital gold,’ Ethereum would then be the “digital silver’!”
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/Mia Stendal