Bitcoin’s ongoing rally fueled by institutional players has brought the leading cryptocurrency to “a tipping point of mainstream acceptance.”
Citigroup (NYSE: C), a Manhattan-based investment bank and financial services corporation with $2.2 trillion in assets, said bitcoin could be used as the main currency in international trade.
Bitcoin for international trade
The investment bank published a 119-page report on bitcoin and how the digital asset has managed to shift from “being a primarily retail-focused endeavor to something that looks attractive for institutional investors.”
The report said that bitcoin has an advantage in global payments because of its decentralized design, traceability, lack of foreign exchange exposure, and fast, cheap, and secure payment channels.
As a result of this, bitcoin could become a major player in international trade.
“These attributes combined with bitcoin’s global reach and neutrality could spur it to become the currency of choice for international trade.”
The U.S. dollar is currently the world’s reserve currency and used for international trade.
However, previous reports have revealed that countries such as China, Iran, Russia, and North Korea are likely to develop a cryptocurrency-based payment system to end the U.S. dollar’s hegemony in international trade.
The report marks a major shift in how Wall Street and institutional investors have previously perceived the cryptocurrency industry.
Coming to the fold
Many traditional banks and investors have previously shunned the digital asset, claiming that it has no intrinsic value and constantly compared it to the tulip mania of the 17th century.
This tune has changed, or at least, has taken a more silent tone as bitcoin’s surge in the last few months has forced institutions to reconsider their positions on bitcoin.
Financial services company PayPal announced last year that it would offer crypto services for its customers in the U.S. It is expanding as crypto seems to be a lucrative business.
Apart from offering services, major companies are beginning to convert their balance sheet into bitcoin, with MicroStrategy and Tesla leading the race.
The flow of institutional capital has made this bull run different from previous cycles, most notably in 2017.
A sustainable bull market
Bitcoin rose to a high of nearly $20,000 in December 2017, only to be followed by a brutal winter that saw the leading digital asset lose 80% of its value.
However, this time seems to be different.
The bull market is supported by institutional capital, the so-called smart money, and analysts believe that the demand outstrips the supply.