Citi, a New York-based financial service company in a report that Bitcoin (BTC) could become the next "massive transformation" in the finance industry. The company even alledged that Bitcoin could replace the mainstream financial system.

Nevertheless, several Citi analysts said that Bitcoin is at a "tipping point" and that could lead to a "speculative implosion". They argued that cryptocurrency systems should be improved so that Bitcoin and other currencies get wider adoption by traders. Furthermore, Citi added that the increased regulation rate could block some innovative players from endorsing the digital currencies.

Citi continued in its 108-page cryptocurrencies report that the digital currencies market is seeing major changes especially in Bitcoin from "primarily a retail-focused endeavor to something that looks attractive for institutional investors."

Analysts at Citi showcased they are positive about the rise of private stablecoins, and central bank digital currencies. The report stated the cryptocurrency market is becoming more legitimate. This will ease crypto adoption and facilitate its integration into the economy.

"In this scenario, bitcoin may be optimally positioned to become the preferred currency for global trade," a team of Citi analysts led by Sandy Kaul, global head of Citi's business advisory services, said in a report.

"It is immune from both fiscal and monetary policy, avoids the need for cross-border foreign exchange (FX) transactions, enables near-instantaneous payments, and eliminates concerns about defaults or cancellations as the coins must be in the payer's wallet before the transaction is initiated." He added

Bitcoin is digital gold, says Citi

The report speculated about the endorsement of Bitcoin by financial institutions such as MasterCard, Bank of New York, PayPal, and other companies like the electric car manufacturer Tesla (NASDAQ: TSLA).

It added that the scarcity of Bitcoin made investors compare the digital currencies to gold; describing it as “digital gold”. Since last year, Bitcoin saw a 400% following the institutional interest. It has since plunged back 20% last week, trading at $47,800 on Monday.

However, the financial company argued that cryptocurrencies still face "obstacles and challenges." These obstacles could should overcome involving "upgrades in the way the marketplace works." This, they said, will provide comfort to major investors about digital tokens. With these hurdles tackled, the crypto market will become a more trust-worthy market.

The company added that more cryptocurrency regulations will be applied in the future with the growing interest in Bitcoin. It said that regulations could be a negative factor that would scare innovative developers away.

"Many of the most innovative and talented developers may choose to withdraw from established platforms deploying more extensive oversight and monitoring. This could end up dividing the liquidity in the system."

In conclusion, Citi said: "The future of Bitcoin is unknowable. Developments are likely to prove decisive. The currency balances at the tipping point of mainstream acceptance or a speculative implosion."

Last month, Citigroup owner of Citi Bank lost a lawsuit for retrieving $500 million it mistakenly wired to Revlon. The mistake is one of the largest in the history of U.S. banks.