Reports from America’s elite bank, Goldman Sachs, at an investor conference held yesterday, stated that cryptocurrencies do not offer same characteristics as financial assets like bonds (supplying consistent cash flow in form of coupons).
Goldman Sachs also explained that one of the odds of Bitcoin is its price swings, as it lost over 37% on Black Thursday. The financial institution compared that with America’s stock index, the S&P 500, that lost 35% but from its all-time high between February and March, which took some weeks to happen.
Pretty clear-cut messaging from Goldman Sachs here:
– Bitcoin and other crypocurrencies are "not a suitable investment for our clients"
– Allure of high volatility in crypto for hedge funds "does not constitute a viable investment rationale" pic.twitter.com/cso3MjKSyW
— Ryan Browne (@Ryan_Browne_) May 27, 2020
Interestingly, America’s elite bank also claims that there are no signs of proof that the asset class has the qualities of gold such as an asset used for hedging against inflation.
Goldman Sachs’s financial advisor further explained that because Bitcoin valuations are primarily driven by one trader or investor selling to another one at a higher price, and not much else, it is not a reliable investment for Goldman Sachs clients.
Goldman Sachs also warned that although hedge funds may trade the cryptocurrencies to take advantage of the high price swings of Bitcoin, for what it is known for; it is not suitable for individual investors.
However, America’s billionaire Michael Bloomberg’s statement months ago openly acknowledged cryptocurrency as a major financial asset class and stated why it should be regulated. He said;
“Cryptocurrencies have become an asset class worth hundreds of billions of dollars, yet regulatory oversight remains fragmented and undeveloped. For all the promise of the blockchain, Bitcoin, and initial coin offerings, there is also plenty of hype, fraud, and criminal activity.”