Deutsche Bank report highlights illiquidity to be the main obstacle for bitcoin

Deutsche Bank report suggests that bitcoin will remain ultra volatile since it is trading with limited value. The main obstacle of the cryptocurrency is its illiquidity.
  • Only 18.7 million or 89% of bitcoins in total circulation have been mined
  • According to the report the liquidity of bitcoin remains low, in terms of investment

Deutsche Bank report suggests that bitcoin will remain ultra volatile since it is trading with limited value. The main obstacle of the cryptocurrency is its illiquidity

We all know that bitcoin is playing a level field game in the crypto market from quite a long time now. Now seeing the movement of this volatile coin, Deutsche Bank sees that bitcoin will remain ultra volatile because the trading conditions are limited. The bank believes that there are just a few large purchases that have been done. Market exits can also give a major impact to the currency’s supply demand equilibrium.

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A recent report formed by the bank shows that crypto currency’s illiquidity features 21 million supply, which is an obstacle. Hence, only 18.7 million or 89% of bitcoins in total circulation have been mined. That expected a year for all bitcoins to be mined is 2140. 

According to the report the liquidity of bitcoin remains low, in terms of investment. In 2020, 28 million  bitcoins changed hands (150% of total bitcoins in circulation), compared to 40 shares of Apple (270% of its total shares in circulation).

Bitcoin is often compared to digital gold and it boils down to the supply angle, in which both are limited, as per the reports. The driver of the price becomes the demand. Deutsche Bank is also concerned about the rising price of bitcoin, its valuation and whether it is good for the cryptocurrency to evolve into an asset class. This could happen in the next 2 to 3 years, as per the research team. 

The market cap of bitcoin is $1 trillion. According to the report, people think it is a commodity but others think bitcoin is a currency. Few think it is a stock. But, it is interesting to know that its market cap is among the top 10, both as a currency and as a stock.

Bitcoin is one such currency whose prices went skyrocketed touching 600% year to date. There were divided opinions formed on bitcoin. Some think it is a speculative bubble waiting to burst or an asset that is here to stay. There was a big run seen in March which hit a $1trillion market value yet again and reaching s new height, above the $60,000 level. 

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Andrew Smithhttp://thecoinrepublic.com
Andrew is a blockchain developer from his education and developed his interest in the cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer.

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