According to a note that was created by Francisco Blanch and other two strategists with the Bank of America in order to move the price of Bitcoin by just 1%, an inflow of $93 million is needed.
Bitcoin’s big rival, gold, needs an inflow of $2 billion for the same type of movement. $2.25 billion are needed in order to move treasury bonds by 1%. This basically translates into Bitcoin being a very volatile asset that is affected by price manipulations from institutional players.
The report is similar to what Larry Fink, the CEO of BlackRock, said in January, namely that Bitcoin may pass as a store of value, but first, it has to prove itself: “[Bitcoin is] still untested, it has huge volatility moving in 5-6% increment with small-dollar investments moving it.”
The researchers for Bank of America believe that even if Bitcoin is a trillion-dollar asset and has a market cap that is approximately 10% that of gold’s, Bitcoin is twice as volatile as the precious metal.
The blame for this volatility is put on heavy accumulation from institutional players but also on Bitcoin rising illiquid supply:
“Looking at detailed blockchain records, we find that the largest addresses have not been selling in aggregate since the pandemic began.”
The report concludes by saying that Bitcoin is an “impractical” means of payment.