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bitcoin goldman sachs crypto asset class
Nexo Logo

No, Goldman Sachs Doesn’t Think Bitcoin is the Next Big Thing

Tony Spilotro by Tony Spilotro
2 years ago
in Bitcoin
Reading Time: 2 mins read
Advertisement

A call focusing on the future US economic outlook hosted by Goldman Sachs that mentioned Bitcoin alongside gold got the crypto market buzzing early this week.

But as details leak out early regarding what’s being covered in the call, it’s been revealed that Goldman Sachs not only doesn’t think Bitcoin is the next best thing, the firm says that cryptocurrencies aren’t even an asset class at all.

Not An Asset Class: Goldman Sachs Slams Crypto

In a call with investors scheduled for 10:30 AM today, Goldman Sachs Chief Investment Officer and Head of Investment Strategy Sharmin Mossavar-Rahmani will discuss the “US Economic Outlook & Implications of Current Policies for Inflation, Gold and Bitcoin.”

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With the Fed printing trillions of dollars with each passing month, investors have been looking to hard assets as a hedge against inflation. Gold has been used this way for decades in the face of an economic downturn. The limited supply keeps its valuation stable and strong, while other cash-valued assets nosedive.

Bitcoin’s recent halving has reignited the discussion around the cryptocurrency and its use as a hedge against inflation. Billionaire Hedge Fund Manager and Philanthropist Paul Tudor Jones recently compared Bitcoin to the “role gold played in the 70s.” Institutional interest at Grayscale Investments has been soaring, causing the firm to gobble up a large portion of the already limited asset’s supply.

Bitcoin being mentioned alongside gold and inflation caused crypto investors to speculate that the first-ever cryptocurrency would be getting a stamp of approval from a massive firm like Goldman Sachs, which currently has nearly $2 trillion in assets under management.

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Instead, leaked Goldman Sachs slides from the call reveal that not only is Bitcoin not getting the nod of support that was expected, but the firm is slamming the entire asset class, as not an asset class at all.

Just reviewed the slides from the Goldman client call later this morning re gold & bitcoin. This slide header summarizes Goldman's take:

"Cryptocurrencies Including Bitcoin Are Not an Asset Class"

— Barry Silbert (@barrysilbert) May 27, 2020

 

Bitcoin Blasted: Does Not Constitute a Viable Investment Rationale

According to the seemingly scathing report, Goldman Sachs says that crypto assets like Bitcoin do not generate cash flow like bonds or “earnings through exposure to global economic growth”. They also don’t provide consistent diversification benefits due to their wildly fluctuating correlations between other assets like gold or stocks.

Goldman Sachs also points out Bitcoin’s notorious volatility, underscoring the fact it fell over 37% on Black Thursday. The S&P 500, by comparison, fell just 35% from its all-time high in February to the March bottom, but it took weeks to happen.

Interestingly, the investment powerhouse also claims that there are no signs of evidence that the asset class acts as a hedge against inflation. But it is this current economic environment that will either make or break Bitcoin and prove the value of its limited 21 million BTC supply.

They further state that because cryptocurrency valuations are primarily driven by one investor selling to another investor at a higher price, and not much else, it’s not a suitable investment for Goldman clients. They warn that although hedge funds may trade the asset to take advantage of the volatility the asset class is known for, this isn’t a “viable investment rationale.”

bitcoin crypto goldman sachs

 

Tags: bitcoinbtcbtcusdBTCUSDTcryptoGoldman sachsxbtusd
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

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