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- Cryptocurrencies are poised for an adoption “hyper-inflection point” soon, Wells Fargo said on Monday.
- You aren’t too late to invest in crypto because it’s still early days for the asset class, the bank said.
- Performance figures of cryptocurrencies are skewed because prices have risen from virtually zero, the team noted.
Investors who fear they may have missed out on the cryptocurrency boom might be wrong, according to new research from Wells Fargo.
In a note published Monday, the bank’s global investment strategy team said cryptocurrencies might be hitting an “adoption inflection point,” much like the internet did in the mid-to-late 1990s.
That means the bank expects a pronounced expansion in the pace of global crypto adoption.
Currently, only 221 million people in the world use cryptocurrencies, according to data from Crypto.com. That equates to roughly 3% of global population. 2021 was an especially notable year for the space, with crypto users doubling in just four months between February to May — to 203 million from 106 million.
Wells Fargo said it acknowledges the “too late to invest” argument, but doesn’t subscribe to it. Instead, the bank said it places itself in the “early, but not too early” bucket — based on swelling global crypto adoption rates.
“If this trend continues, cryptocurrencies could soon exit the early adoption phase and enter an inflection point of hyper-adoption, similar to other technologies,” Wells Fargo said. “There is a point where adoption rates begin to rise and do not look back.”
“Precise numbers aside, there is no doubt that global cryptocurrency adoption is rising, and could soon hit a hyper-inflection point.”
Although cryptocurrencies remain in the nascent stages of investment evolution, Wells Fargo said it believes they make for viable investments today.
Still, the bank noted that “regulatory roadblocks” could be a major obstacle as this is the number one reason why high-net-worth investors are unwilling to invest in crypto.
Past performance of cryptocurrencies may not be a good indicator because prices have essentially risen from from virtually zero, the team said.
Wells Fargo used bitcoin as an example, pointing out that the first real-world transaction made using the coin took place 16 months after its creation when it was valued at about $0.004. Bitcoin was launched in January 2009, but it didn’t cross $1 a coin until February 2011.
Bitcoin was trading just above $43,000 a coin on Tuesday, down 0.65% on the day, but close to its highest in a month. It’s down 8% so far this year, according to data from CoinMarketCap.
Since a vast majority of digital tokens are under five years old, the bank described cryptocurrencies as a “relatively young investment space.” They’re also a unique investment product — owing to the complexity of the underlying technology — which makes it difficult to attract inflows or research coverage, the note said.
Multiple US corporates like MicroStrategy, Tesla, and Block have bought cryptocurrency worth millions, showing how volatility in prices has unfazed large investors.
Moreover, US senators have spoken positively about leading crypto bitcoin. Last week, Senator Pat Toomey said crypto-assets are here to stay and should be included in a “thoroughly diversified portfolio.” Separately, Senator Ted Cruz disclosed he bought bitcoin worth up to $50,000 in January.
Wells Fargo itself began offering crypto exposure to its wealthy clients last year. The bank said it recommends buying crypto via professionally-managed private placements.