DBS Bank economist stated that the global pandemic of COVID-19 has accelerated the development of Bitcoin.

DBS Bank's Chief Economist Taimur Baig stated that the market demand drivers for Bitcoin were significantly different before and after the global pandemic. Additionally, Baig pointed out that Bitcoin is more akin to gold than to currency.

Before and After the Pandemic

In August, Singapore's largest commercial bank, DBS Bank, released a report titled "Digital Currencies: Open and Private, Now and Future," describing the current development of digital assets.

The report was led by DBS Bank's Chief Economist, Taimur Baig. Taimur Baig has previously held senior economist positions at the Monetary Authority of Singapore, Deutsche Bank, and the International Monetary Fund, and is adept at looking at digital currencies and the potential role of central bank digital currencies (CBDCs) from a macro perspective.

The report divides the market demand for cryptocurrencies such as Bitcoin (BTC) into two different stages: before and after the pandemic outbreak. Taimur Baig pointed out in an interview:

"The demand before the pandemic outbreak was largely speculative, with people seeing Bitcoin's stellar performance and wanting to be part of the game, hence allocating 1% of their investment portfolios to Bitcoin."

However, as the global economy declined due to the COVID-19 pandemic, the demand for Bitcoin seemed no longer driven by speculation. Taimur Baig noted that Bitcoin has a fixed circulation and cannot be counterfeited. At present, people are generally concerned about US dollar inflation and with the arrival of a zero-interest rate era, the idea of "holding cryptocurrencies as a hedge asset beyond gold" has started to emerge in their minds.

Bitcoin Resembles Gold More Than Currency

On the other hand, many consider Bitcoin to be a "currency" and analyze it in terms of foreign exchange. However, Taimur Baig believes that the value of conventional sovereign currencies is determined by a country's economy, such as productivity and long-term growth. Bitcoin, on the other hand, does not rely on the wealth of any one country and does not undergo fundamental changes due to economic fluctuations in a single country. Taimur Baig stated:

"From this perspective, it (Bitcoin) is more akin to gold than to foreign exchange."

DBS Bank is not the only bank to have noticed this trend. Sygnum, a digital asset bank in Singapore, which holds a banking license from the Swiss Financial Market Supervisory Authority, shares this view. Martin Burgherr, Co-Head of Clients at Sygnum Bank, mentioned:

"Since the outbreak of COVID-19, the interest from family offices and high-net-worth private clients has been increasing, viewing digital assets as an alternative to hedge against inflation risks. As banks recover from the impact of the pandemic, we expect our market share to further increase domestically and internationally, as they request us to provide B2B business services, enabling their clients to invest in digital assets."