Bitcoin likely to remain “ultra volatile” due to its limited tradability: Deutsche Bank

March 22, 2021

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Deutsche Bank says it expects bitcoin to remain “ultra-volatile” due to its limited tradability, adding that just a few large purchases could impact cryptocurrency’s demand and supply.

German banking giant Deutsche Bank says it expects bitcoin to remain “ultra-volatile” due to its limited tradability, adding that just a few large purchases or market exits could significantly impact the cryptocurrency’s supply-demand equilibrium. In a recent report, the bank’s research team pointed to bitcoin’s illiquidity – which features a set 21 million supply – as an obstacle.

89% of bitcoins in total circulation have been mined.

Currently, around 18.7 million or 89% of bitcoins in total circulation have already been mined. That expected year for all bitcoins to be mined is 2140, roughly a century from now. “As an investment asset, bitcoin liquidity remains low,” the report noted. “Last year, 28 million bitcoins changed hands (150% of total bitcoins in circulation), compared to 40 shares of Apple (270% of its total shares in circulation).” The heart of the comparison between bitcoin – often referred to as digital gold – and gold boils down to the supply angle, in which both are limited, the report said. One major marginal driver of the price, therefore, becomes the demand.

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Bitcoin continues to trade around $58,000.

“Bitcoin’s market cap of $1 trillion makes it too important to ignore,” the Deutsche Bank report said. “Some people think bitcoin is a commodity. Others think it is a currency. A few think it is a stock. Nevertheless, its market cap is among the top 10, both as a currency and as a stock.” The leading cryptocurrency has seen its price skyrocket 600% in the last year amid divided opinion on whether it is in a speculative bubble waiting to burst or an asset that’s here to stay. Bitcoin hit a $1 trillion market value yet again this month and reached a new peak above the $60,000-level, after an already-robust February.