Banking giant JPMorgan has some reservations regarding El Salvador’s recent decision to make Bitcoin legal tender.
In a report revealed by Bloomberg, analysts from the bank say they believe that BTC being used as legal tender will put strains both on Bitcoin and El Salvador itself.
According to JPMorgan’s analysis, there is too much Bitcoin locked up in illiquid entities for it to function as a proper currency. They say that more than 90% of Bitcoin stays in the same hands for more than a year – with a “significant and rising fraction held by wallets with light turnover.”
“Daily payment activity in El Salvador would represent ~4% of recent on-chain transaction volume and more than 1% of the total value of tokens which have been transferred between wallets in the past year.”
The illiquidity of Bitcoin that the bank alleges could act as, in their words, “potentially a significant limitation on its potential as a medium of