18 June 2021: Goldman Sachs claims that Bitcoin is not digital gold and is not a long term store of value, even claiming that gold itself is not an appropriate store of value, undeterred by recent reports and fears of potential rising inflation. Goldman, confirmed in a report on June 14th, will be expanding their cryptocurrency trading desk to include the likes of Ethereum, contradicting their 180 degree stance they have now taken against Bitcoin.
Goldman Sachs Flip Flops on Cryptocurrencies Again
Despite a report from Goldman Sachs that came out in May offering support for cryptocurrencies such as Bitcoin and Ethereum, new reports out of the bank have completely reserved from their previous positive narrative toward the currencies. In this recent report released by Goldman Sachs, the bank concluded that in their perspective, Bitcoin is "not a long term store of value or an investable asset class." Goldman even went as far to say that the comparisons that Bitcoin was like digital gold were foolhardy and claimed that "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"
“This cohort strongly disagrees with the view that cryptocurrencies like Bitcoin are digital gold,”
Goldman Sachs stated that reasons for their recommendation not to invest in cryptocurrencies include a disproportional risk versus reward, environmental concerns, and even the potential of cyber attacks or hackers. This fails to acknowledge Goldman Sach's own environmental footprint or possible exposure as a target for hackers. Despite the negative report on cryptocurrencies, it has already been reported that Goldman will actually be expanding its cryptocurrency trading desk by offering interested investors Ethereum.
Mathew McDermott, the director of digital assets at Goldman, stated that he believes institutional investment in the space will continue to grow significantly even with market and price volatility. So, despite what Goldman Sachs claims about Bitcoin and cryptocurrencies not being a viable investment to add to portfolios, the bank is signaling the precise opposite and offering the cryptocurrencies anyway with a demand coming from their respective clients.
Author's Note, Summary
Goldman Sachs was last reported to have posted a net profit of approximately $44 billion USD. For comparison, El Salvador, the first country to officially adopt Bitcoin as legal tender, has a GDP estimated around $27 billion USD meaning that Goldman Sachs is roughly 39% larger than the country. As one of the largest banks on Wall Street, the weight of the words Goldman Sachs speaks does have merit, until you consider that they are offering cryptocurrencies to their investors anyway.
From the words of Goldman's own Digital Assets Director Mathew McDermott, “Institutional adoption will continue. [...] Despite the material price correction, we continue to see a significant amount of interest in this space" per this report. McDermott is right, and with increasing interest on the international level from the likes of countries such as Panama, Nigeria, and others, as more institutions, cities, and countries adopt Bitcoin, Goldman will be right there in line with everyone else.
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