Crypto Evangelicals Criticize Goldman Sachs Position
Goldman Sachs is not sure if there is a reason to invest in cryptocurrencies such as bitcoins. Crypto evangelists – unsurprisingly – are not impressed by his appreciation.
On Wednesday, Goldman Sachs’ investment management division released a presentation ahead of a conference call for investors to analyze the impact of the coronavirus outbreak on the U.S. economy. A significant part of the presentation was devoted to bitcoins and other virtual currencies.
«Cryptocurrencies, including bitcoins, are not an asset class», – believed chief economist at Goldman Sachs Jan Hatzius and Harvard professor Jason Furman. The presentation details several reasons why cryptocurrencies cannot be considered an asset class on their own, as they do not generate cash flow like bonds and stocks from the impact of global economic growth..
«we believe that while hedge funds may find trading cryptocurrencies attractive due to their high volatility, this charm is not a viable investment justification», – Hatzius and Furman write.
Many industry analysts point to increased interest from institutional investors such as hedge funds as a potential catalyst for price increases. Such speculation rose after a veteran of the hedge fund industry Paul Tudor Jones stated earlier this month that it has almost 2% of its assets in Bitcoin.
Crypto enthusiasts were eagerly awaiting the Goldman Sachs conference call, with some speculating that a 151-year-old bank could spell out the reason for investing in bitcoin. Needless to say, they didn’t get what they wanted on Wednesday.
Twins Cameron and Tyler Winklevoss, co-founders of the Gemini cryptocurrency exchange, were most visible in response to Goldman Sachs statements.
«Hi Goldman Sachs, 2014 just called and asked me to talk about him», – Cameron Winklevoss tweeted.
His brother Tyler stated: «The more I think about it, I come to the conclusion that the Goldman Sachs report is likely fake.». He It has referring to sports tactics used to knock an opponent out of the way by pretending that you are moving in the same direction with them and then sharply turn in the opposite direction.
Hatzius and Fuhrman compared the bitcoin monster rally in late 2017 – when it rose to nearly $ 20,000 – with the Dutch «tulip fever» 17th century, one of the most famous speculative bubbles in history. Similar comparisons were previously made by bank executives, in particular by CEO J.P. Morgan Jamie Dimon, who named bitcoin «fraud», which ultimately «explode».
Goldman Sachs has played down the idea that bitcoin is «scarce resource», noting that some of the most valuable coins – bitcoin cash and bitcoin-SV – are «forks». This means that new coins were created based on changes in the Bitcoin network protocol..
Bitcoin bulls often argue that the limited supply of a digital asset is part of what underpins its value and makes it potential. «hedge» against currencies that are vulnerable to devaluation during the economic crisis.
The bank also named cryptocurrencies «conductor of illegal activities», highlighting their use in fraudulent schemes and money laundering.
«Importantly, competitors Goldman Sachs, Fidelity and J.P. Morgan made significant investments in cryptocurrency», – indicates Dave Hogson, Investment Director and Managing Director of NEM Ventures, a cryptocurrency venture capital firm. Last year, Fidelity created a separate unit to handle cryptocurrency clearing and custody, and J.P. Morgan has developed its own internal digital currency «JPM Coin» for payments.
«Despite the fact that volatility is indeed high, the performance compared to last year represents a steady uptrend based on asset holding rather than volatility trading. Believing that this is not profitable for investors, Goldman Sachs risks forcing its investors to miss out on one of the best performing asset classes in the last hundred years, let alone the last ten.», – adds Hogson.