Digital currencies have not held their value during the ongoing health crisis, with bitcoin losing thousands of dollars in March, reflecting the gloomy mood in global markets. Bitcoin has managed to rebound since then and investors hope that banks will finally start to treat the cryptocurrency as a genuine asset class.
Investment bank Goldman Sachs might have unleashed a war on bitcoin by claiming that cryptocurrencies do not belong to an “asset class”, can be a “conduit for illicit activity” and are generally “not a suitable investment” for the bank’s clients.
In slides prepared for a meeting to assess the impact of the coronavirus pandemic on the US economy, inflation and future policies, the financial institution outlined its rationale for dismissing bitcoin’s role, arguing that cryptocurrencies do not generate a flow of cash like bonds, do not provide “consistent diversification benefits” and do not generate “any earnings through exposure to global economic growth”.
The logo for Goldman Sachs appears above a trading post on the floor of the New York Stock Exchange (File)
Betrayal or Declaration of War?
The Financial Times immediately dubbed the bank’s move a “betrayal”, bearing in mind Goldman Sachs’s excitement with this digital currency back in 2017-2018 when it was even mulling the possibility of launching a “bitcoin trading desk” to facilitate investments. However, the new report showed that the financial institution has had a significant change of heart, even sparking a “war” with so-called “cryptocurrency evangelists”, according to CNBC.
Many analysts had anticipated that with ongoing pandemic and unrolling economic crisis, the 151-year-old bank would greenlight investments into bitcoin that recently climbed to $10,000, after a dramatic fall in March to less than $5,000. But following the bank’s comments on Wednesday, some prominent crypto-investors and figures in the industry, including the co-founders of the Gemini exchange, the Winklevoss twins of Facebook fame, slammed the bank’s vision.
“The more I think about it, the Goldman report is probably a head fake”, his brother Tyler added, hinting at the possibility that the bank was just trying to throw its competitors under a bus by moving in the opposite direction after initially appearing to take up an anti-bitcoin position.
According to the analyst, Goldman Sachs has just “risked causing its investors to miss out on one of the best performing asset classes in the past 100 years” with its report.
Despite the Goldman Sachs’ report, bitcoin is still trading at around $9,500, gaining 2.9% since Wednesday.
Sourse: sputniknews.com
