Bank of America covers Bitcoin - 1300$ fair price, potential for growth

[dego]

“We believe Bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money transfer providers,” wrote Bank of America currency strategist David Woo in a 14-page note to clients this morning. “As a medium of exchange, Bitcoin has clear potential for growth, in our view.”

See:
http://www.businessinsider.com.au/baml-initiates-coverage-on-bitcoin-2013-12

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[Dr Bloggood]

Interesting. Very positive for BTC. But strange on several levels:

1. Why are they doing this? BTC is competition, how should they get their piece of the cake?

2. Store of value close to silver? Lol, with all respect due to BTC, silver has been around for a couple of 1000 years...

3. Where does this number of 1300$ come from? My guess: They totally pulled it out of their asses... when you look at number of people, money supply, total available gold, etc, etc, that number is MUCH higher...

[dego]

Interesting. Very positive for BTC. But strange on several levels:

1. Why are they doing this? BTC is competition, how should they get their piece of the cake?

2. Store of value close to silver? Lol, with all respect due to BTC, silver has been around for a couple of 1000 years...

3. Where does this number of 1300$ come from? My guess: They totally pulled it out of their asses... when you look at number of people, money supply, total available gold, etc, etc, that number is MUCH higher...

1. If they can rip you off when you trade silver with them, they will know how to rip you off while trading Bitcoins with them

2. But it actually is a store of value, even if it becomes worthless and its also volatile as silver

3. Yes, pulled out of their asses, as they do with all the other commodities, stocks etc.

[porcupine87]

“We believe Bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money transfer providers,” wrote Bank of America currency strategist David Woo in a 14-page note to clients this morning. “As a medium of exchange, Bitcoin has clear potential for growth, in our view.”

See:
http://www.businessinsider.com.au/baml-initiates-coverage-on-bitcoin-2013-12

Is Bank of America not a one of the big four? That is more interesting than such free adds from some unknown companies...

[mccoyspace]

Maybe this is the emerging consensus by the powers that be: bitcoin is new kind of commodity.
That's the box that they will stuff it into.

[porcupine87]

Interesting. Very positive for BTC. But strange on several levels:

1. Why are they doing this? BTC is competition, how should they get their piece of the cake?

Maybe the bank thinks: We will lose anyway. The only change to stay alive is to use Bitcoin. Imagine, you can store your bitcoins on a server of a multi-billion-company. I would do that!

[dego]

Is Bank of America not a one of the big four? That is more interesting than such free adds from some unknown companies...

You can imagine, that all the others also look very closely to Bitcoin... and you can bet that they won't wait for long if they have any indication that its possible to make $$$ with BTC.

[Herp]

This is a HUGE turning point for BTC.

Big banks finally starting to realize this is something they can't fight but have to accept. Be part of it or be left behind.

Big turning point and game changer.

[crazy_rabbit]

Maybe this is the emerging consensus by the powers that be: bitcoin is new kind of commodity.
That's the box that they will stuff it into.

True, and if bitcoin is a new kind of commodity- there are going to be all sorts of new ways to make money off it.

Also it's pretty interesting they say $1300 is fair price. Kind of gives an indication that maybe bitcoin is right where it ought to be for the moment.

[matt608]

They clearly don't understand bitcoin is far more than a currency/store of value/financial instrument, it is a protocol that will revolutionise dozens of industries. It's like the next layer of the Internet. This is a massive undervaluation.

There's coloured coins which is being developed which will allow for a completely secure decentralised stock exchange and that will be a brilliant way to equity crowd-fund any project, ranging from a blog, an art project to a business or social venture.

Then there's a ton of other things, this video gives a few really good ideas of what it could be used for but I've seen all sorts of other things too: http://www.reddit.com/r/Bitcoin/comments/1rsm4r/stefan_molyneux_explains_why_bitcoin_may_be_the/

[dego]

Other analysts see a bit higher prices (but I guess they invested in BTC themselves):

http://www.coindesk.com/bitcoin-price-reach-98500-say-wall-street-analysts/

[Herp]

Other analysts see a bit higher prices (but I guess they invested in BTC themselves):

http://www.coindesk.com/bitcoin-price-reach-98500-say-wall-street-analysts/

Analysts from big banks just want to play it safe and don't risk more extreme price targets. Keeping their job, by playing it safe is more important than getting it right. If 1000 people say same thing and they're wrong about it, it's very easy to save face. If only one makes such statement and he's wrong about it, his job may be at risk because it's much harder to save face. Most analysts are aware of this and act accordingly.

[laowai80]

Game on now. After this you can fully expect each big bank to develop their own crypto, maybe smaller banks will do too.

[Herp]

Game on now. After this you can fully expect each big bank to develop their own crypto, maybe smaller banks will do too.

They won't go down that road because it takes big investments in infrastructure and it's not something their mindset allows them to do.

More banks will start coverage of Bitcoin. Expect Morgan Stanley, Goldman, Paribas, Societe Generale, Deutsche Bank to follow suit. This in turn will bring even more money into Bitcoin itself and the bitcoin infrastructure.

[dego]

Game on now. After this you can fully expect each big bank to develop their own crypto, maybe smaller banks will do too.

You mean BOACoin?

[laowai80]

They won't go down that road because it takes big investments in infrastructure and it's not something their mindset allows them to do.
 

No special investments are required. People do it all the time in Alternative Currencies section with very limited resources. It doesn't take much to clone bitcoin code or even write something difefrent from it in some aspects. These alt-coins find a lot of supporters here on the forum, who start mining it, and if a big bank starts backing an alt-coin, it'll gather hundreds of miners in 24 hours. No special invesment is required here, bank's staff probably spends more on lunches each day.

[RodeoX]

Why they are doing this is simple. It is now more profitable to launch bitcoin banking services than to limit bitcoin's expansion. You and I know that we don't need a bank with bitcoin. But the next wave of users will not understand the technology and may very well be wooed into BoA online wallets and exchanges. The profits will be sick!

[balanghai]

I think from the beginning they have been buying huge chunks of coin. And come to think of that they have neat powerful main frames to do massive computing power. They could have invested earlier.

[Herp]

They won't go down that road because it takes big investments in infrastructure and it's not something their mindset allows them to do.
 

No special investments are required. People do it all the time in Alternative Currencies section with very limited resources. It doesn't take much to clone bitcoin code or even write something difefrent from it in some aspects. These alt-coins find a lot of supporters here on the forum, who start mining it, and if a big bank starts backing an alt-coin, it'll gather hundreds of miners in 24 hours. No special invesment is required here, bank's staff probably spends more on lunches each day.

Banks invest, they're not big on creating new systems. They will just pick a currency like Bitcoin or Litecoin and invest in either currency itself or the infrastructure.

[indianplayers]

Very good news, but for some reason it feels strange that this is coming from a bank.

[Herp]

Very good news, but for some reason it feels strange that this is coming from a bank.

It's not strange at all. Banks want to be part of disruptive sectors where there's huge exponential growth potential. This is where the money is made.

[2sog]

I wonder if them saying that $1300 per coin is a fair price is a hint that BOA holds some coins and they have decided they want to offload a portion of them when it hits that price and by saying that the price will get that high so they can start the dump.

[Herp]

I wonder if them saying that $1300 per coin is a fair price is a hint that BOA holds some coins and they have decided they want to offload a portion of them when it hits that price and by saying that the price will get that high so they can start the dump.

It's not. Analysts from big banks just wanna play it safe to keep their job. They always put very conservative price targets.

They also tend to manipulate prices lower when they wanna buy or when they're short.

[Junkey]

I don't see a link to the 14-page doc submitted.  Just news about it.  Does anyone have a direct link?

[Imahara]

Here is the Bank of America report:

https://www.documentcloud.org/documents/885843-banks-research-report-on-bitcoin.html

I think it is a nice first effort. They fail to imagine second order effects. The use of cryptocurrency can alter the economy substantially, leading to more demand for transaction currency for example.

Transaction costs are the main reason behind vertical integration of the supply chain, take transaction costs away and the supply chain can disintegrate. Many more financial transactions just in getting a product to market, so more demand for transaction balances. Just an example.

[kireinaha]

Some of you guys really crack me up. BOA is not "giving up the fight" or "accepting their fate". They clearly recognize the potential of Bitcoin as an upcoming ecommerce payment system or a store of value, and as a bank, of course they're interested in the potential, because people are going to need to convert money between Bitcoin/USD.

[marketermac]

They clearly recognize the potential of Bitcoin as an upcoming ecommerce payment system or a store of value, and as a bank, of course they're interested in the potential, because people are going to need to convert money between Bitcoin/USD.

Hopefully their involvement also brings their lobbyists to keep strict regulation and laws away from the profits they'll be pulling in with BTC..they benefit we all benefit I'm guessing.

[davidgdg]

Interesting. Very positive for BTC. But strange on several levels:

...

3. Where does this number of 1300$ come from? My guess: They totally pulled it out of their asses... when you look at number of people, money supply, total available gold, etc, etc, that number is MUCH higher...

They get the number on the basis of:

* 5 Bn - assuming BTC gets a 10% share of global e-commerce

 +

* 4.5 Bn - based on BTC becoming a major player in the remittance market

+

+ 5 Bn - based on BTC becoming a store of value roughly along the lines of silver

Total 14.5 Bn divided by the number of bitcoins gives about 1,300 per coin.

The figures are very conservative and as others have remarked, what they completely overlook is the protocol/programmability aspect of BTC.

Still, interesting and vaguely positive.

[takagari]

Seems that number is based off all the coins possible..

Also seems like a nice trick to me. The bank come's out announces it, and give's BTC a top value not much higher than we are at already... Basically leaving people thinking "Cool but no real room left to grow so I'll go elsewhere!"

Nice play BOA, Nice play!

[PenAndPaper]

So bank of america wants bitcoin as a payments platform while bank of china wants it as a commodity
The one thing that it's sure is that noone wants it as a currency. I wonder why 

[zoro]

all coins can co-exist with fiat and banks. the methods are countless. one would be that banks can secure or quarantee
your wallets

[PenAndPaper]

all coins can co-exist with fiat and banks. the methods are countless. one would be that banks can secure or quarantee
your wallets

There is already a pretty ambitious project from cyprus for a bitcoin bank. Of course traditional banks have all the infrastracture ready but they have to jump to the wagon soon if they don't want to left behind for ever.

[jbreher]

What proof do we have that this is actually from BOA, rather than some teenage prank?

All I see so far is a tiny article on a bloggish pseudo-news site, and a .pdf with an improbable title hosted on some sketchy doc sharing site.

I'll be skeptical, pending something actually traceable to BOA.

[FandangledGizmo]

I posted this reply in another thread but personally, I believe the $1300 is specifically chosen because that is the number they want to keep Bitcoin below until the end of the year. It definitely appears to me that they don't want Bitcoin to stay above the gold price (Which is heavily supressed) till the end of the year and draw unwanted publicity to Bitcoin or Gold.
(Notice how the two big dips happened right around that level.)

From my other post

'They've done a lot of negative press lately and the last thing they want is articles on major magazines around the world going into Xmas season where families and groups discuss the hot topics of season as well as plan their investment strategy for the following year.  

Some headlines...

'In January it was cheaper than silver, today it's more expensive than gold'

'GOLD 2.0 - As Bitcoin overtakes the gold price we ask is Bitcoin the new gold?'

The cover of Time Magazine is just a question mark with the question 'Who is Satoshi?'

'Bitcoin up 10 000%+ in 2013, what will it do in 2014?'

The Chinese announcement, (Which wasn't awful but obviously caused the last dip), was made right after the David Cameron visited in China, (And he just works for the bankers in the City of London), so while they might have mentioned international trade in their discussions, I think it was mostly David Cameron saying to China 'Please, I beg you, pretty please, do whatever you want with Tibet we won't say a word, please just help us to keep Bitcoin below $1300 till the New Year.'

Bitcoin holding above $1300 for any period will bring unwanted Publicity to both Gold and Bitcoin for the bankers, who are hoping to keep peoples money in their bank accounts till the mass bail-ins begin at least.'


What could this also tell us? Maybe, that 'they' think that if Bitcoin can hold above gold before Xmas it could go to the moon next year, so c'mon Richard Branson make it so  

[darkmule]

Even as Banks go, BoA is particularly malevolent and corrupt.

[pening]

people need to start getting used to the idea that if Bitcoin makes its mark, the banks will be there.  that's what they do, make money from money.  given their existing resources and some of the issues with Bitcoin, they will end up running the network.  and if not the current banks, then those who run the network will be the banks.

[LiteCoinGuy]

the price target is stupid like this bank. when he really thinks that 1300 USD is the maximum, he doesnt understand bitcoin.

[takagari]

It's all about damage control!

[Herp]

The price targets bank analysts put on stocks go up all the time. I've seen it all before with many different stocks I've tracked over the years.

Expect BoA to raise their price target once btc goes above 1.3k. Guess some of you here are not familiar with how these "analysts" assign price targets. Their conservative btc price target is very normal, it's what they do in most cases. Just check the stocks covered by BoA analysts and you'll see what I'm talking about.

[dmartig]

They clearly recognize the potential of Bitcoin as an upcoming ecommerce payment system or a store of value, and as a bank, of course they're interested in the potential, because people are going to need to convert money between Bitcoin/USD.

Hopefully their involvement also brings their lobbyists to keep strict regulation and laws away from the profits they'll be pulling in with BTC..they benefit we all benefit I'm guessing.

this is naive. if they bring their lobbyists they will do what all fascists do. it is called regulatory capture. all regs will be written to benefit those at the top. pick an industry.

as sallie said in eddie and the cruisers " guys like you and me word man, they discover oil under our garden all we get is dead tomatoes"

[Herp]

They clearly recognize the potential of Bitcoin as an upcoming ecommerce payment system or a store of value, and as a bank, of course they're interested in the potential, because people are going to need to convert money between Bitcoin/USD.

Hopefully their involvement also brings their lobbyists to keep strict regulation and laws away from the profits they'll be pulling in with BTC..they benefit we all benefit I'm guessing.

this is naive. if they bring their lobbyists they will do what all fascists do. it is called regulatory capture. all regs will be written to benefit those at the top. pick an industry.

as sallie said in eddie and the cruisers " guys like you and me word man, they discover oil under our garden all we get is dead tomatoes"

That's Hollywood left wing propaganda.

Bitcoin foundation does its own lobbying Washington. They've hired some lobbyists. The New York bankers want to get a piece of the Bitcoin action and will also lobby to help Bitcoin. It's already happening in NY btw.

[darkmule]

people need to start getting used to the idea that if Bitcoin makes its mark, the banks will be there.

Agreed.  But if I were to pick a bank to be the first one that shows up, BoA is the absolute last I would want to be the first.  As bad actors go, they're the worst.

I'd prefer, say, Wells Fargo.

[silvergoldandbitcoin]

people need to start getting used to the idea that if Bitcoin makes its mark, the banks will be there.  that's what they do, make money from money.  given their existing resources and some of the issues with Bitcoin, they will end up running the network.  and if not the current banks, then those who run the network will be the banks.

Given that it's their business to make money with money, I can't see how any bank, big or small, could ignore bitcoin.

[501]

people need to start getting used to the idea that if Bitcoin makes its mark, the banks will be there.  that's what they do, make money from money.  given their existing resources and some of the issues with Bitcoin, they will end up running the network.  and if not the current banks, then those who run the network will be the banks.

Given that it's their business to make money with money, I can't see how any bank, big or small, could ignore bitcoin.

This.

Bankers don't care about the products they're investing in. They only care that those products are making money.

If gold is making money, they invest in gold. If bitcoin is making more money, they gradually move to invest in bitcoin.

There is no "bankers and the 1% love fiat money and fiat is here to stay." Bankers don't care about fiat, they care about making lots of money and buying expensive things. If bitcoin is the best way to achieve that goal, they'll be investing in bitcoin soon enough.

[franky1]

1300 today they say.

well that means the new 3600 coins generated as miner reward comes to a daily total of $4,680,000. so as long as more then $4.7mill of Fiat which gets put into exchanges per day then the price will continue rising because of demand (more then $4.7m) exceeding supply (3600 coins)

is there any way of tallying up the exchanges $ deposits easily, to see the combined daily dollar volume of bitcoin?

[Cubic Earth]

1300 today they say.

well that means the new 3600 coins generated as miner reward comes to a daily total of $4,680,000. so as long as more then $4.7mill of Fiat which gets put into exchanges per day then the price will continue rising because of demand (more then $4.7m) exceeding supply (3600 coins)

is there any way of tallying up the exchanges $ deposits easily, to see the combined daily dollar volume of bitcoin?

I suppose $4.7m would be the maximum required to absorb the freshly mined coins at the $1300 price level.  But not all of the mined coins are put up for sale, so the fiat number could possibly be much less.

On the other hand, there would also have to be fiat available to buy any coins that holders decided to sell.  That number could presumably be between 0 and 12m (or whatever the current coin supply is) depending on the day.

So while you can think of the market cap being supported by a certain influx of fiat, I would argue it is just one variable out of a handful of important ones, and not really too helpful as a model unto itself.

[johnyj]

The bitcoin bubble which is never going to burst is the final rescue for the banks and economy

[Imahara]

1300 today they say.

well that means the new 3600 coins generated as miner reward comes to a daily total of $4,680,000. so as long as more then $4.7mill of Fiat which gets put into exchanges per day then the price will continue rising because of demand (more then $4.7m) exceeding supply (3600 coins)

is there any way of tallying up the exchanges $ deposits easily, to see the combined daily dollar volume of bitcoin?

This would only hold if you freeze all the outstanding bitcoin. I can understand that the logic is changing for early adapters. Even the biggest believer would be rational to cash out a bit of their bitcoin in dollars or spend them. The volatility can still hurt you and a continued price rise this year is far from guaranteed. You still need to eat

[Dr Bloggood]

people need to start getting used to the idea that if Bitcoin makes its mark, the banks will be there.  that's what they do, make money from money.  given their existing resources and some of the issues with Bitcoin, they will end up running the network.  and if not the current banks, then those who run the network will be the banks.

Given that it's their business to make money with money, I can't see how any bank, big or small, could ignore bitcoin.

This.

Bankers don't care about the products they're investing in. They only care that those products are making money.

If gold is making money, they invest in gold. If bitcoin is making more money, they gradually move to invest in bitcoin.

There is no "bankers and the 1% love fiat money and fiat is here to stay." Bankers don't care about fiat, they care about making lots of money and buying expensive things. If bitcoin is the best way to achieve that goal, they'll be investing in bitcoin soon enough.

Big banks are manipulating the gold and silver markets hardcore to help the government support fiat. While its true that they also make good money with it, they are clearly on a government supported (or at least tolerated) mission.

So its not always 100% about making money for the big corrupt players like Morgan and Sachs, its also about keeping up the status quo.