Crypto Global

Goldman Sachs recognizes cryptocurrencies

Jun 1, 2021

In this article we would like to share the latest news in the crypto market specifically about the influence of Goldman Sachs.

In a recent report by Goldman Sachs, cryptocurrencies like Bitcoin are cited as investable assets that have their own specific risk as the crypto market is still relatively young and in an adoption phase. And that's because, despite the recent drop in prices, crypto prices have made big gains in recent years and FOMO - Fear Of Missing Out - was a major driver of the larger price movements.

A year ago, Goldman Sachs mentioned cryptocurrencies like Bitcoin in a report and did not classify them as an asset class. At the time, Goldman Sachs seemed quite conclusive in their claim due to the following characteristics:

- They don't generate cash flow like bonds do

- They generate no profit when exposed to global economic growth

- Due to their unstable correlations, they do not offer consistent diversification advantages

- They do not dampen the volatility with a historical volatility of 76%

- There is no evidence of an inflation hedge

Goldmans Sachs claimed that the only reason Bitcoin has value is because other investors are willing to buy it. In last year's report, they also mentioned the illegal activities that bitcoin and crypto were used for. Goldman Sachs then concluded that this was not a suitable investment for their customers and that hedge funds might find trading cryptocurrencies attractive due to their high volatility.

Things have changed a lot since then. Now Goldman Sachs published a very positive report on the crypto market last week. The latest report states that Bitcoin's potential for widespread social acceptance, given its strong brand, in addition to its other properties such as security, privacy, portability, and the fact that it is digital, make it a plausible store of value for future generations makes. highlights the three largest areas in the crypto ecosystem that Ethereum has already shown in the areas of DeFi, Games, NFT and Stable Coins. For this reason, the prices of Ethereum have also risen and there is a high chance that Ether could overtake Bitcoin as the dominant digital store of value and Ethereum has been called the “Amazon of Information”.

After reading this comprehensive report, it is amazing to see how quickly Goldman Sachs has changed its mind on this. This year, Goldman Sachs restarted its crypto service in response to "customer demand" by offering its wealthy customers exposure to Bitcoin instruments. We should see something similar at other banks in the months and years to come.