Bitcoin is a strong USD contender that can legit replace the fiat currency but it must hit $213,000, about 970% of its all-time high (ATH) as per the report of largest Swiss Bank, USB. The high volatility and low transaction processing capacity of its network is holding it back from becoming a mainstream asset class or money.
Bitcoin [BTC] must hit $213,000: Largest Swiss bank, UBS report
According to the world’s largest Swiss bank, UBS, Bitcoin can replace fiat currency, US Dollar but for now, it is too volatile and must hit first nearly $213,000 i.e. about 970% of its all-time high at $20,000 (approximately).
In its 34-page report, Bloomberg has reported that the investment bank and financial services company says, Bitcoin is a legitimate contender of US Dollar. Due to high volatility, the world’s leading cryptocurrency can’t be considered either money or an asset class yet and has to wait.
In order to replace the US Dollar that involves coins, bills, travelers’ check and others, Bitcoin price has to hit the $213,000 or the processing capability of its network needs to be improved dramatically.
At the time of writing, Bitcoin has been trading at $7,380 coming down from the $8,400 last week.
Reportedly, the most popular and number one currency has hurdles that limit its chance to become a mainstream payment system or asset class as stated,
“Owing to its lack of price stability, bitcoin falls short of criteria that need to be satisfied to be considered money.”
Hurdles: High price volatility & low transaction processing capacity
The currency network of the cryptocurrency can process about seven transactions per second which is a really small percentage of mainstream payment processor companies like Visa and Mastercard. This constraint inherent in Bitcoin’s network is what limits its usefulness.
Joni Teves, the strategist at UBS said,
“Bitcoin cannot handle the volume of transactions processed by mechanisms being used in the real world.”
The report states,
“Our findings suggest that Bitcoin, in its current form, is too unstable and limited to become a viable means of payment for global transactions or a mainstream asset class.”
Moreover, as per a recent research, due to a dramatic change in Bitcoin price, the use of Bitcoin in commerce has declined from its peak in last September.
“Fixed supply and unusual demand dynamics make the system susceptible to high price volatility, in turn making it difficult for bitcoin to step into the role of money or to be a viable new asset class.”
The UBS report that was published by its strategists also states that cryptos have the potential to become an alternative asset class. To be a legitimate asset class, regulatory support will work in its favor. However, it also notes that the prices of cryptos are likely to remain highly volatile and be more appealing to speculative investors.
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A computer science engineer, I have been adamantly following the blockchain and cryptocurrency industry for the past 2 years. A crypto enthusiast and hardcore blockchain follower. Reach out to him at [email protected]