Updated 30 Jun, 2021

Goldman Sachs Performs U-Turn on Bitcoin as an Investable Asset

Goldman Sachs Performs U-Turn

Key Takeaways:

  • Goldman Sachs releases a new report that describes how the bank sees Bitcoin and cryptos
  • The bank declares Bitcoin is not “an investable asset”, contradicting its previous report

In An About-Face, Goldman Sachs Now Considers Bitcoin Unworthy of Investment

A top US investment bank, Goldman Sachs performs U-turn on its viewpoint on Bitcoin. In a report, the firm states Bitcoin is “not a long-term store of value or an investable asset class”. This comes less than a month after it launched its crypto trading desk

The report is titled “Digital Assets: Beauty is Not in the Eye of the Beholder” and warns its clients against investing in the digital asset space. Amongst the reasons, its high volatility, regulatory risks, and environmental impact were listed. The 60-page report marked a change of heart for Goldman as it contradicted a previous research. “Crypto: A New Asset Class?” confirms the mainstream financial institution considers the crypto market “a new asset class”, while Bitcoin is defined as an “investable asset”.

In the new report, the firm’s Investment Strategy Group explains how it sees the correlation between Bitcoin and gold. The cryptocurrency is regarded as a hedge against inflation, and gold, a traditional safe haven among financial assets.

The report says, “The argument that Bitcoin and cryptocurrencies are a digital version of gold does not confer any value to Bitcoin and other cryptocurrencies, because gold itself is not a consistent or reliable store of value.”

Goldman Considers Cryptocurrencies and Blockchain Unsafe

Moreover, the research paper suggested that blockchains, as an emerging technology, and cryptocurrencies, are untrustworthy. Citing concerns over the stability of the infrastructure, the report says that  “cryptocurrencies and blockchain technology are built on layers of trust that could be eroded.”

In conclusion, Goldman’s analysts say that their “valuation methodologies” and “multi-factor strategic allocation model” have labeled cryptocurrencies “not a viable investment” for diversified portfolios.

Goldman Sachs has a history of contradictory statements related to Bitcoin and the fast-emerging cryptocurrency market. A little over a year ago, the banking firm slammed Bitcoin. It had said that it’s not “an asset class”, a stance that changed as the market moved on and gathered solid institutional backing in 2021.

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