Bank of America (BoA) Report offers a Bullish Long-Term Outlook of Cryptocurrencies, DeFi, and NFTs

A research report of the Bank of America Corporation (BoA) titled “Digital Assets Primer: Only the first inning” has said that in the long run, it has a bullish long-term outlook for cryptocurrencies, DeFi (decentralized finance), and NFTs (Non Fungible Tokens)[...]

A research report of the Bank of America Corporation (BoA) titled “Digital Assets Primer: Only the first inning” has said that in the long run, it has a bullish long-term outlook for cryptocurrencies, DeFi (decentralized finance), and NFTs (Non Fungible Tokens). The report published on October 4, 2021, has underscored that the US$2.15 trillion market cap of the global cryptocurrency market is “too large to ignore”


A nuanced appraisal of the digital asset sector has been given by BofA Securities, a subsidiary of BoA. It praised the innovations that are taking place especially in the fields of DeFi and NFTs. They have underscored the fact that the crypto market has evolved a lot in the last few years and became “so much more” than just Bitcoin. During 2013-2017, the dominance rate of BTC was hovering around 86% to 95%. However, currently, bitcoin’s dominance rate has come down to just over 40%. It more than halved in the last 3-years. 


The BoA report says that the cryptocurrency sector comprises:


“Tokens that act like operating systems, decentralized applications (DApps) without middlemen, stablecoins pegged to fiat currencies, central bank digital currencies (CBDCs) to replace national currencies, and non-fungible tokens (NFTs) enabling connections between creators and fans.”


It went on add:


“For us, digital assets are not about payments per se. They’re about a new computing paradigm – a programmable computer that is accessible everywhere and to anyone and owned by millions of people globally.”


The BofA report showed the comparative growth of the crypto and blockchain sector in the last two years. While US$5.5 billion was injected into this sector in 2020, it will more than triple in 2021 to over US $17 billion. While 66 million users across the world used a blockchain-based application in May 2020, it almost quadrupled to 221 million users globally in June 2021. 


The report head of Global Cryptocurrency and Digital Asset Strategy, Alkesh Shah, says:


“The applications built on this new software architecture appear to be growing more quickly than past technologies… Anyone in a network can establish a process (application or project) that provides consistency and trust.”


While highlighting the explosive growth of NFTs, it said that in the first half of 2021, over US$2.5 billion has been generated by the NFT marketplace known as OpenSea. However, the report also warned the crypto traders about the heightened risks associated with trading the non fungible tokens or NFTs, especially due to high volatility. It went on to say that “heightened risks in this segment [...] need to be fully understood before NFTs can achieve true adoption.”