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Since its invention in 2008 and launch in 2009, bitcoin has captured investors' attention with erratic price fluctuations and stellar performance. For financial market participants it holds two major propositions, that of being a means of exchange and that of being a store of value. While the former seems unattainable, bitcoin may be on its way to becoming a convention in terms of storing value.

 

Key takeaways:

  • Bitcoin unlikely to assert itself as a widespread medium of exchange due to low and costly transaction capabilities.
  • Past performance has been driven mostly by speculative demand, but the divisibility, fungibility, liquidity, limited supply, decentralisation , security and increasing adoption of bitcoin could pave the way for it to become a store of value in the distant future.
  • Long term upside potential remains high, as are the risks of failure and total loss of value.

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The CIO Special below is available to download. Please refer to the Important Information at the end of the memo for disclosures and risk warnings.

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The value of an investment can fall as well as rise and you might not get back the amount originally invested at any point in time. Your capital may be at risk.

No assurance can be given that any forecast or target can be achieved. Forecasts are based on assumptions, estimates, opinions and hypothetical models which may prove to be incorrect. Past performance is not indicative of future returns. Performance refers to a nominal value based on price gains/losses and does not take into account inflation. Inflation will have a negative impact on the purchasing power of this nominal monetary value. Depending on the current level of inflation, this may lead to a real loss in value, even if the nominal performance of the investment is positive.

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Change of name: As part of Deutsche Bank’s Private Bank, the former International Private Bank also adopted this title on July 20, 2023.