📝 Previous Report 📝
The previous Goldman Sachs report was bearish on crypto and said it was not an asset class. They claimed that Bitcoin is not an asset class because of the following characteristic: – No cash flows – no earnings – unstable correlations – high volatility They claimed that the only reason that Bitcoin has value is because other people are willing to buy it. They also compared it to a number of other periods of market euporia.
📝 Latest Report 📝
Right off the bat, the report addresses their previous statement of Bitcoin not being an asset class. The top of the report is titled ‘Crypto: a new asset class’ They interview Mike Novogratz. He claims that as long as the Macro trends we see continuing, the institutional adoption we have seen will likely continue. Zach Pandl who is one of Goldman’s top strategists agrees with Novogratz. He thinks that Bitcoin could become a strong global macro play. Novogratz also thinks that some of the most exciting growth in the crypto space is likely to come from Defi, Non Fungible tokens and payments – all of which are currently being built on Ethereum. Jeff Currie, the head of commodities research, claims that in order for cryptocurrencies to be a strong store of value, they have to have use cases beyond just price speculation. This can then temper the volatility and make them hold value that much better. Another senior strategist at GS, Christian Mueller Glissman found that even a small allocation to Bitcoin (5%) in a standard 60/40 bond equity portfolio would have led to strong out performance. He states that the reason for this comes down to the relative lack of correlation that Bitcoin has with those traditional assets – although this correlation has picked up quite a bit over the year.
📈 Market Insights 📈
They looked at the price rises of crypto with other assets over the year. What is surprising is the crazy rally that we have seen in the Goldman Sachs Commodities index. This shows that further inflation is down the pipes. They also have a chart that shows the volatility that we have had for these assets over the year. While crypto is volatile, you have to consider it in context of the potential returns that could be earned. This volatility is also likely to reduce over time as there is more use of the blockchain. This increases the utility demand which increases the value as a currency. They also show that some of the largest wallets are also the ones that are the most likely to hodl in the long run.
🤔 Goldman’s Moves 🤔
There is a reason that Goldman has changed its tune towards Bitcoin and that is because their clients are looking for Bitcoin exposure. They cannot be servicing these clients if they take the view that it is not an asset class. They have even opened up internal trading desks that have recently traded a derivative linked swap.
📜 Disclaimer 📜
The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading Forex, cryptocurrencies and CFDs poses considerable risk of loss. The speaker does not guarantee any particular outcome.