Goldman Sachs returns to Bitcoin & Blockchain

Goldman Sachs’ Private Asset Management division recently released an annual outlook for its clients that has little to say about cryptocurrency and Bitcoin. Whether it is thought in all departments of the US Bank, but remains unclear.

The investment strategists said: “There is no doubt that Bitcoin price rise pushed it into bubble area.” Meteoric price rise in a short time, even the price increases during the dot-com bubble in the shade. According to the outlook, this also applies to other cryptocurrencies.

Goldman Sachs’ strategists come to this conclusion by comparing Bitcoin and Ether prices with the S & P 500, Nasdaq and Topix stock price indices around their highs – and with price developments during the 17th century Dutch tulip mania. The result: The price movement of the Bitcoin makes both stock and tulip bubbles appear dwarfish. In the case of the Ether, this picture is even more pronounced.

The Investment Strategy Group team led by Chief Investment Officer Sharmin Mossavar-Rahmani and Head of Tactical Asset Allocation Brett Nelson continues:

“Although we don’t know whether Bitcoin or any other cryptocurrency is doubling or tripling from current prices, we don’t believe that these cryptocurrencies, will retain their value in the long term.”


It also states that the concept of digital currency based on Blockchain technology is quite useful, given the benefits it can bring, such as facilitated execution worldwide, lower transaction costs, less corruption through the traceability of all transactions, and the security of property. However, the authors write: “The Bitcoin does not offer any of these key advantages.” On the contrary, the explanations would not be facilitated, the billing often takes up to ten days, and by the end of 2017, the price difference for a Bitcoin between 17 US trading venues in the peak up is to 31 percent amount. Transaction costs have skyrocketed, and frequent hacker attacks have wiped out Bitcoin’s holdings of individual wallets and entire stock exchanges.

Goldman Sachs; strategists do not believe that Bitcoin collapse would have serious contagion effects on the global economy or financial markets. They point out that at the peak of the dotcom bubble in March 2000, the combined market capitalization of the Nasdaq index and the IT stocks in the S & P 500 Index was 101% of US Gross Domestic Product (GDP) – and 31% of global GDP. By contrast, the market capitalization of cryptocurrencies is only 3.2% of US GDP and 0.8% of GDP worldwide. With cryptocurrency trading and ownership concentrated more in Asia than in the US, global GDP is the more appropriate benchmark.

Goldman Sachs’ Private Wealth Management Investment Strategy Group’s skeptical views do not necessarily reflect the views of the entire bank, as noted in the outlook quoted here. Media reports, according to Goldman Sachs as the first major, Wall Street Institute wants to build a trading area for cryptocurrencies in New York, which could go to the end of June 2018 according to the financial news agency Bloomberg. Goldman Sachs had neither confirmed nor denied these reports.

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