News & Analysis

Tier 1 FX dealer Deutsche Bank sends note to clients calling crypto "tacky"

Andrew Saks, Thursday, 20 May 2021

The daggers are out!

As the gargantuan FX dealers who have been slowly losing their market share as Tier 1 FX counterparties in the OTC derivatives world to slick, well organized non-bank market makers who understand the world of retail FX and the need for qucik execution and pragmatic order fills begin to take stock of the latest focus among almost everyone worldwide, the snide comments are beginning to appear.

Deutsche Bank, once the world's second largest Tier 1 FX interbank dealer after Citigroup which held the slot for 17 years before being ousted by non-bank market maker XTX Markets in 2018, has been losing market share alongside many of its Tier 1 piers to the relatively newly established non-bank sector for some time now.

In the aftermath of regulatory censuring for FX benchmark fixing and LIBOR manipulation, along with last-look execution practices and legacy technology, the shift has gone toward multi-asset global markets accessibility, ECN-focused non-bank market makers and new asset classes which can be 'manipulated' without recourse by members of the public.

The latest example of this is yesterday's huge drop in cryptocurrency values, with five very popular digital coins crashing $700 billion in value without even a murmur from the general public and without any dent in interest in cryptocurrency.

Deutsche Bank just this lunchtime spilled its sour grapes by issuing a notice to its clients which stated "value of bitcoin is “entirely based on wishful thinking”, Deutsche Bank has said in a note to clients, adding that the cryptocurrency had now become “tacky” rather than trendy.

The extent of the notice attracted outspoken CNBC news anchor Carl Quintanilla just this lunchtime, who headed straight for his Twitter account and published what he states as the words of Deutsche Bank's executives who stated "It took Bitcoin a mere three months to go from trendy to tacky... Just as a ‘fashion faux pas’ can happen suddenly, we just received the proof that digital currencies can also quickly become passé.”

This represents yet another dichotomy between bankers and individual private investors who were represented by the two opposing camps a few years ago when Bitcoin was first invented.

Remember the mavericks with polka-dot shirts, loud shoes and bow ties who held seminars advocating Bitcoin? People like Jeff Tucker and Mario Betschart who hosted crowds of computer science enthusiasts who referred to traditional financial institution workers as "Banksters" and wanted to foment the democratizing of all finance via distributed ledgers and unbacked, very risky cryptocurrencies?

The same is happening here. Today's new world is made up of honest, astute people who see the crash as an opportunity, whilst the banks lash out.

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