According to a note authored by Francisco Blanch and two other strategists with the Bank of America (NYSE:BAC), it takes $93 million worth of inflows to move the price of Bitcoin by 1%.
Comparatively, gold requires an inflow of at least $2 billion for its price to move by a single percentile. Meanwhile, $2.25 billion would be needed to move treasury bonds by the same percentage. This makes Bitcoin a highly volatile asset, susceptible to price manipulations from institutional players.
The report supports the worries of BlackRock’s CEO Larry Fink who said that while Bitcoin could pass as a store of value, the leading cryptocurrency would have to prove itself. In his words, “[Bitcoin is] still untested, it has huge volatility moving in 5-6% increment with small-dollar investments moving it.”
The Bank of America researchers assert that despite being a trillion-dollar asset and having a market cap that is roughly 10% of gold’s, Bitcoin is twice as volatile as gold.
The analysts point to heavy accumulation from institutional players and Bitcoin rising illiquid supply as the reason behind this volatility. They said:
Looking at detailed blockchain records, we find that the largest addresses have not been selling in aggregate since the pandemic began.