Goldman Sachs Explores Crypto as an Asset Class, Reconsidering Old Stances

Goldman Sachs, one of the most important banks in the United States -and the whole world- released a report on cryptocurrencies, and its content is quite promising for the ecosystem.

The report “Crypto, a new asset class” is not yet available to the general public. Still, it has already been shared on social networks by investors with early access to these investigations.

Alex Krüger, founder of asset management firm Aike Capital and active Crypto Twitter commentator, shared part of the report, saying it should be available in full “whithin a few days.”

Crypto, a new asset class – quite a comprehensive report by Goldman. pic.twitter.com/FP2sewJCTx

— Alex Krüger (@krugermacro) May 21, 2021

Experts Tell Goldman Sachs Why Cryptocurrencies Are Proving Their Value

The report discusses the nature of cryptocurrencies as an asset class. To do so, it gathers the opinions of several experts in the field, such as Galaxy Digital CEO Michael Nogoratz, Global FX’s Zach Pandl, Michael Gronager of Chainlaysis, and critics such as Nouriel Roubini.

The report describes the most essential characteristics of the leading cryptocurrencies and the usefulness of each one.

In this regard, for example, the bank explains that Bitcoin serves as a large-cap currency, XRP as a real-time settlement system, Ethereum as a smart contract platform, BNB as a utility token/application, and Polkadot as a blockchain with interoperability capabilities. In addition, providing each project with a unique feature allows for some segmentation of their target audience based.

Differences among the top cryptocurrencies. Source: Twitter, attributed to Goldman Sachs

Goldman Sachs said that Bitcoin’s value lies fundamentally in its use and acceptance. Michael Novogratz claimed that the massive influx of institutional capital is proof of the attractiveness of cryptocurrencies and the maturity of the markets.

Novogratz defends Bitcoin’s nature as a good store of value because of the simple social consensus around the coin.

“The world has voted that they believe it is [a good store of value].”

For his part, Micahel Sonnesheim, CEO of Grayscale Investments, reinforces Novogratz’s view. For him, Bitcoin’s scarcity is “a way to hedge against inflation and currency debasement.”

Sonnesheim also explained that although cryptocurrencies were particularly affected by the general economic crash due to the COVID pandemic, the rebound in 2020 outperformed any other asset, reaffirming the resilience of Bitcoin and other cryptocurrencies as an asset class.

Bitcoin is Appreciating Over Time, And Investors Should Keep an Eye Open

Goldman Sachs also shared a graph of the price evolution of Bitcoin, showing that there is a similarity in behavior between the 2013-2016 and 2017-2021 periods. For Alex Krüger, this is an optimistic point for those who believe in the cyclical behavior of markets and could represent an excellent opportunity to invest. Throughout Bitcoin’s history, after every drop – no matter how significant – the rebound tends to reach new all-time highs over time.

BTC Price comparisson. Source: Twitter, attributed to Goldman Sachs

The report represents a significant change of stance from a presentation last year in which they claimed that “Cryptocurrencies Including Bitcoin Are Not an Asset Class” because they did not generate cash flow, earnings through exposure to global economic growth, diversify profits or protect against volatility, and therefore did not recommend them to their clients.

“We believe that a security whose appreciation is primarily dependent on whether someone else is willing to pay a higher price for it is not a suitable investment for our clients.”

But with an appreciation of almost 600% since then, it seems it might be time to make amends, and this report may be an excellent way to reconsider old stances.




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