Bank of America claims it costs just $ 93 million to move Bitcoin’s price by 1%

Bank of America claims it costs just $ 93 million to move Bitcoin’s price by 1%

by

The now infamous Bank of America research note on Bitcoin also contains research that suggests that only $ 93 million in inflows are needed to move Bitcoin’s price by one percent.

“Bitcoin is extremely sensitive to rising dollar demand,” said the note authored by Bank of America strategist Francisco Blanch, presenting contributions from Philip Middleton and Savita Subramanian.

The analysis found that it would take at least $ 2 billion in inflows to move the price of gold by a single percentile, while more than $ 2.25 billion would be needed to exert the same price impact on the Treasury bonds with more 20 years.

“We estimate that a net entry into Bitcoin of just $ 93 million would result in a 1% appreciation,” concluded the report, adding:

“What created the huge upward pressure on Bitcoin prices in recent years, and particularly in 2020? The simple answer: modest capital inflows. “

With Bitcoin’s market capitalization of almost $ 1.1 trillion equivalent to about 10% of gold, research suggests that Bitcoin is twice as volatile as gold per dollar in incoming, despite the asset having existed for almost 12 years.

Bank of America researchers attribute the small cost necessary to move Bitcoin’s price to the strong accumulation of whales, decreasing the number of coins available for purchase on the exchanges. “Looking at the detailed records of the blockchain, we found that the largest addresses have not been sold together since the beginning of the pandemic,” they said.

Bank of America’s claims seem broadly in line with the findings of analytical cryptography firm Glassnode, which estimated that 78% of Bitcoin’s supply was illiquid in December 2020, leaving only 20% of the circulating supply available for trade on the exchanges.

With the number of new entities active on the Bitcoin network reaching unprecedented At increasing levels, an increasing number of investors are competing for a shrinking pool of BTC, resulting in spikes in demand raising prices easily.

Earlier this month, Glassnode estimated that 95% of the traded BTC changed for the last time in the chain in the last three months, further evidencing that whales are hiding their coins for the long term. The company’s co-founders, “Jan & Yann,” tweeted:

Although the Bank of America discovery appears to support Glassnode’s BTC case, the report took on a highly negative tone compared to Bitcoin in general – criticizing the crypto asset for being volatile, polluting and an “impractical” means of payment.