Early Bitcoin critics are now turning to Bitcoin evangelists following an influx of institutional money and growing adoption. French economist and Deutsche Bank analyst Marion Laboure is the latest to hype the digital asset. She said in a recent report that Bitcoin is now “too important to ignore.”
Her statements came after Bitcoin’s market cap breached the $1 trillion benchmark. Laboure opines that Bitcoin’s massive Bull Run can be justified by the Tinkerbell Effect, a term used by economists to describe the power of belief. This means that Bitcoin is valuable because people believe it is. The French economist wrote:
Bitcoin's market cap of $1 trillion, and scope for a continued rise in prices, makes it too important to ignore. And central banks and governments understand that Bitcoin and other cryptocurrencies are here to stay. Thus, governments are expected to start regulating them late this year or early next year.
However, Laboure believes that Bitcoin will remain a highly-volatile asset due to its low liquidity. Comparatively, Bitcoin’s daily trade volume is just 1.9% of that of gold, despite being the third-largest currency by circulation.
The analyst believes that Bitcoin is not a current threat to existing financial systems. Although the digital asset is growing to become an important store of value and means of payment, it may have to contend with government-issued digital assets and offerings from centralized firms such as Facebook’s Diem stablecoin.