Deutsche Bank has issued a market report for 2018. The document, created by the International Economist Chief Torsten Slok, lists 30 possible threats that could affect global markets next year.
Along with entries like "North Korea" and "Brexit", there's Bitcoin. Its inclusion shows to what extent the banking sector is considering the revitalized digital currency. While some institutional investors see Bitcoin as an opportunity, many more consider it a threat.
Bitcoin about everything
With more than 100,000 employees and annual revenues of 35 billion dollars, Deutsche Bank is a world power. The company has had its share of disputes (it received a fine of 425 million dollars for money laundering this year and another 258 million for violating sanctions in 2015), but still exerts a considerable influence on the global financial sector.
When your Chief Economist speaks, especially when he warns of possible market threats, the world of investments takes note.
Torsten Slok's list of the 30 most risky markets they face in 2018 is an interesting read. The entries, which do not appear in any particular order, include a sharp rise in inflation in the United States, the Russian presidential election and the explosion of the housing bubble.
However, there is a particular entry that stands out, and that is Bitcoin. Specifically, the entry indicates: "Bitcoin accident, impact of trust in retail investors".
The main concern of Torsten Slok with Bitcoin is that newcomers, including institutional investors who market Bitcoin derivatives, could be seriously burned if there is a significant drop.
The possibility of a Bitcoin lock is certainly not the issue; This, along with any other item on Slok's 30 strong list, is a possibility. The inclusion of Bitcoin along with major world elections and market events shows the magnitude of the remarkable increase in Bitcoin.
By early 2017, few could have predicted that Bitcoin would have become a global threat that financiers would take seriously at the end of the year.
On Thursday, Deutsche Bank published a presentation on digital currencies on its website that stated:
"We classify cryptocurrencies as a risky investment because recent price increases are based in part on speculation. Volatility is very high, reached 80% and the sector is not generally regulated ... there is an appreciable risk of significant losses ".
What the list of risks of Deutsche Bank does not take into account is the other threat that Bitcoin faces: that the digital currency absorb air from the rest of the banking sector.
Bitcoin is not intended to make other global asset classes obsolete. However, if its stellar ascent continues, investment banks face a dilemma. No other action, bonus or equity in history has performed as well as Bitcoin this year. Traditional assets that promise a yield of 6-8% seem decidedly docile in comparison.
If the Bitcoin were to fall significantly in 2018, it would frighten some of the new funds that have been destined to pour into space since the Bitcoin futures were announced.
The true believers who have been sharing the reality (not just the contracts) since before the Bitcoin was good, will not be affected by a big correction. They have experienced the bear markets of the cryptoactive in the past and will continue to rely on the digital currency long after the investment bankers have slipped away to find their next bright element.
Source: news.bitcoin.com