Bank of America/ricardodiaz11/CC BY 2.0.
Bank of America "disagrees" that crypto has no intrinsic value
Is the crypto winter thawing?
The Bank of America has refused to jump on the crypto-bashing bandwagon, claiming that the nascent technology and industry are not deadbeat.
In the July edition of its Global Cryptocurrencies and Digital Assets report, the Bank of America concluded that despite the blockchain industry being "unpredictable" it still creates value.
"We disagree that blockchains and the applications that run on top of them have no intrinsic value – a comment we hear regularly," the report said.
Despite delivering the ethereum and bitcoin networks generating £9bn in transaction fees, crypto scepticism has been ripe among policy-makers, regulators and financial gurus alike.
A similar sentiment was echoed by business tycoon Warren Buffet, who told his audience at the annual Berkshire Hathaway shareholders meeting, "I wouldn't take [bitcoin], what would I do with it?".
When considering the publicised of stablecoin Luna, Tether's decoupling from its peg and bitcoin trading 75 per cent below its all-time high, their concerns may be warranted.
However, the Bank of America has insisted that blockchain applications generate cash flows through transaction fees, network validations and NFT sales and purchases.
Not only did Bank of America's stance towards the value of cryptocurrencies buck the trend, but so did its risk on analysis.
According to the report, the market value of cryptocurrencies climbed 11 per cent in the last two weeks of July, raising the industry's market capitalization to just under £800bn ($1 trillion).
In the wake of the higher-than-expected CPI numbers released on July 13 and the Federal Reserve's highest rate hike in two decades, the crypto market seems to be rallying.
Despite incurring heavy losses, cryptocurrencies (+406 per cent) have still outperformed the S&P (+21 per cent) and the S&P Software (+49 per cent) since 2020.
Interestingly, the Bank of America reports that stablecoin inflows to exchanges have risen for three consecutive weeks, while bitcoin and ethereum have experienced outflows from exchanges and into personal wallets.
This movement of funds suggests investors are swapping their less lucrative stablecoins to purchase risk-on cryptocurrencies – a potential thawing amid the current crypto winter.