Digital& NFT

BofA Sees Digital Assets in First Inning (and the Rise of NFTs)

Are digital assets still just in the first inning of a nine inning game? That looks to be the case, or at least that is the message from the research department at BofA Securities. While the team is not issuing price targets on various cryptocurrencies and digital assets, an October 4, 2021 report shows how the $2 trillion (plus) digital asset ecosystem is both thriving and growing. And while the growth and future are not riskless, there is a very dedicated view ahead that will pertain to investing in and owning digital assets and non-fungible tokens (NFTs).

BofA valued the digital economy at more than $2 trillion and counts more than 200 million users. The bank’s central message to investors is simple — the digital asset universe is too large to ignore.

BofA’s report also suggests that crypto-based digital assets could form an entirely new asset class. This fits right in with the theme that Collectors Dashboard sees high-end collectibles in general as an alternative asset class.


While Bitcoin is the de facto leader in all things digital with a market value of about $900 billion, BofA sees the digital asset ecosystem as being so much more. This includes tokens that act like operating systems and decentralized applications without middlemen. The report also sees stablecoins (crypto pegged to fiat currencies) as having a significant role, with central bank digital currencies replacing national currencies.

Perhaps the biggest news for the collectibles segment is that BofA sees the growth of NFTs enabling connections between creators and fans.


Venture Capital invested more than $17 billion in digital assets and blockchain investments during the first half of 2021. That is already triple the $5.5 billion invested in 2020. According to BofA:

This creates a new generation of companies for digital assets trading, offerings and new applications across industries, including finance, supply chain, gaming and social media. And yet we’re still in the early innings. The largest near-term risk we see is regulatory uncertainty.


One growth driver has been traditional investments by the media players into NFTs. These are just some of the NFT transactions that have been noted:

  • NBA’s launch of Top Shot;
  • Autograph (Tom Brady, Tiger Woods, Wayne Gretzky et al);
  • Kings of Leon as the first band to sell a new album NFT;
  • and the sale of Claude Lanzmann: Spectres of the Shoah (the first Oscar-nominated documentary to be sold as an NFT).

BofA sees the potential range of media items which could be sold as NFTs as being both extensive and in very early innings. Still, these moves will take some time to evolve as several companies and sports leagues take a more cautious approach to the digital marketplace.


BofA also used Gemini’s 2021 State of the U.S. Crypto Report to show some estimated population numbers. The estimate is that 21.2 million (about 14%) of adults in the United States own digital assets. If that is not large enough of a pool, the report pointed to an additional 19.3 million (another 13% of adults in the United States plan to buy digital assets in 2021.

It’s also not just pimply-face kids involved despite the digital asset development and adoption being led by Gen Y, Millennials and Gen Z. The average age of the potential buyers is 44 years old. And it’s not just guys — as 53% of the potential buyers are female.

And let’s not leave the corporation out. BofA’s report points out that corporations are not risking being left behind by ignoring digital assets and applications. The bank noted that corporations are actively exploring the new technology and also exploring use cases.


BofA has noted that Ethereum is in the middle of a major update to Ethereum 2.0 in 2022. The bank sees that update significantly increasing its functionality and scalability. Perhaps equally as important is that the update should reduce environmental concerns. The BofA Report specified:

Fans of Ethereum liken it to a platform like the iPhone enabling applications (projects) or as Digital Oil vs Bitcoin as Digital Gold. By running decentralized applications (DApps) on the Ethereum infrastructure platform, developers are able to leverage a network of computers that combine into a single and powerful decentralized supercomputer (virtual machine). Use cases range across smart contracts, NFTs, stablecoins, DeFi and ICOs (initial coin offerings).


BofA points out that the rise of NFTs caught many of the legacy digital asset players by surprise. While the market has cooled since $3 billion worth of NFT sales in August of 2021 alone, that is still against an entirety of just $250 million in 2020. The driving force was corporate, celebrity and individual demand. The most surprising figure is that the offerings included more than 200,000 participants.

With NFTs often containing data that point to an online version of art or a physical asset (and ownership or certain rights), BofA opines that NFTs could be used instead of deeds, titles or anything else that is needed to demonstrate ownership. NFTs can also do this without a middleman charging a fee.

The report also specifies the role of collectors here:

Collectors view the current generation of NFTs as the firsts of a new digital art form. The NFT wave was kick-started earlier this year by Beeple’s digital artwork NFT sale at Christie’s for $69mn (3rd highest auction price for a living artist). Yes, the image could be copied, but the blockchain establishes the true ownership (provenance) and any associated rights.

The view is that NFTs are evolving with artificial intelligence and smart contracts being added to the underlying code. These can help generate a perpetual royalty stream for the original creator every time the NFT is sold. The bank noted just some of the recent NFT transactions:


BofA sees multiple companies already as winners in this digital asset expansion. PayPal is an obvious winner, but the report included many others like Signature Bank, Coinbase, SVB Financial and many more. The bank also noted that other tokens beyond bitcoin and ether (cardano, solana and binance) all vying for developers to build projects. It was noted up front that BofA did not issue any price targets or direct forecasts for individual cryptocurrencies and digital assets. That said, BofA did commit to providing deep dives into the top tokens by market value in follow-up report.

It is important to differentiate between the different forms of digital assets rather than lumping them all together. How a worthless rock can sell for $1 million when the creators even say point blank that there is no purpose other than enjoyment is still puzzling. Other lots have sold for tens of millions of millions of dollars, and may be worth more broken up than kept together.

As with all reference to the being in the first inning, there are always some catches. Not all games make it into the ninth inning, and some go into extra innings. Stay tuned for more.