Bitcoin’s (BTC) plunge this week has not only shaken investors but also rattled banking institutions. While the institutional players continue buying the dips, the traditional banks have once again joined the anti-Bitcoin rant.
Germany’s biggest banking institution published a note “Bitcoin: Trendy is the last stage before tacky,” on Thursday, May 20. While quoting fashion icon Karl Lagerfield, Deutsche Bank’s Marion Labouré said:
“What’s true for glamour and style might also be true for bitcoin. Just as a ‘fashion faux pas’ can happen suddenly, we just received the proof that digital currencies can also quickly become passé.”
She further referred to the Bitcoin phenomenon as the “Tinkerbell effect”. Labouré added:
“The value of bitcoin is entirely based on wishful thinking. Bitcoin’s value will continue to rise and fall depending on what people believe it is worth”.advertisement
Labouré also pointed out Bitcoin’s vulnerability to react to some news and tweets. As we know, Elon Musk’s Bitcoin bashing tweets earlier this week followed by China’s crackdown caused the entire crypto market to take a nosedive on Wednesday.
While Marion Labouré states that Bitcoin’s $1 trillion valuations certainly make it attractive, it still has limited utility for transactions. Speaking to Yahoo Finance, she adds: the “real debate is whether rising valuations alone can be reason enough for bitcoin to evolve into an asset class, or whether its illiquidity is an obstacle.”
Global Banks Join Anti-Bitcoin Rant
Just one BTC price correction was enough for traditional banks to hop on to their anti-Bitcoin rant while completely ignoring the phenomenal rally that the crypto asset registered earlier. UBS global wealth management, CIO Mark Haefele called Bitcoin a “speculative asset” referring to Wednesday’s price crash.
Referring to crypto in general, Haefele added that investors really don’t need to have crypto in their portfolio. “The portfolio benefits of holding cryptos are limited, in our view,” he added. Reminding his clients he further added: “only a handful of companies accept them as a means of payment” and that “most recently, Tesla reversed a decision to do so.”
In a recent note to clients, the JPMorgan strategists also noted that “institutional investors appear to be shifting away from bitcoin and back into traditional gold, reversing the trend of the previous two quarters,” while questioning Bitcoin’s status as a gold alternative.