The banking sector has been interested in cryptocurrencies and blockchain technology for a long time. Recently, Deutsche Bank published an analysis on Bitcoin. This cryptocurrency was compared in the report to diamonds, although until recently it was referred to as "gold of the XNUMXst century".
Assets worth their weight… diamonds
Recently, Deutsche Bank published a Bitcoin analysis by Marion Laboure and Galina Pozdnyakova. It describes the current price trend of the most popular cryptocurrency, and also estimated what its situation will look like at the end of the year.
The analysis also found that Bitcoin should be compared more to highly traded assets such as diamonds than to a stable and secure asset such as gold. This is because the Bitcoin price is actually volatile. Variable enough that this cryptocurrency cannot be considered either stable or safe, which in turn can be said about gold. Bitcoin is closer to those assets that are in a state of dynamic market trading, for speculative or investment purposes.
Gold, Diamonds and Bitcoin Fluctuating Price
Considering 2022, for example, the price of Bitcoin has fallen in both the stock and bond markets. It is also not able to survive in the commodity markets. As indicated in the analysis by Deutsche Bank, the reduction in the Bitcoin price was influenced by the outflow of liquidity from financial markets, for which central banks are largely responsible. The position of gold seems much more stable, although in September last year Marion Labore described Bitcoin as "gold of the XNUMXst century".
The report refers to the situation of De Beers, one of the main diamond producers in the world. The attention was paid, inter alia, to on its large-scale marketing campaign aimed at making consumers perceive diamonds in a different way. The company has managed to build a strong foundation for a multi-billion dollar industry. The analysis noted that the diamond market situation can be applied to many other areas, including cryptocurrencies.
The difficult situation of the cryptocurrency market
The authors of the report say directly that stabilizing cryptocurrency prices is a real challenge. This is largely due to the fact that there are no common valuation models similar to those used on exchanges. Moreover, the cryptocurrency market is very fragmented. The complexity of the cryptocurrency system can cause their prices to keep falling.
The fact that the number of competing cryptocurrencies is quite large only contributes to the weakening of their position. Although Bitcoin itself has not yet come across a strong competitor, the same cannot be said about altcoins.
In addition, the analysis highlights the fact that the cryptocurrency market has been integrating with benchmarks for some time, including Nasdaq. This means that the situation of the technological markets will necessarily be reflected in the situation of the cryptocurrency market.