In an article published today, August 3rd by Business Insider, heads of American multinational investment bank and financial services company Goldman Sachs have slammed Bitcoin and the cryptocurrency market. According to a midyear economic-outlook report, Goldman Sachs’ investment strategy group predicts the price of Bitcoin will continue to decline.
“Our view that cryptocurrencies would not retain value in their current incarnation remains intact and, in fact, has been borne out much sooner than we expected,” said Chief Investment Officer Sharmin Mossavar-Rahamani, who headed the strategy group responsible for the report. “We expect further declines in the future given our view that these cryptocurrencies do not fulfill any of the three traditional roles of a currency: they are neither a medium of exchange, nor a unit of measurement, nor a store of value.”
In a section of the full Goldman Sachs report titled ‘Bitcoin and the Unsteady Cryptocurrency Mania’, researchers cite that the price of Bitcoin has dropped by more than 60 percent since its December 2017 highs of $19,511. Ether has also fallen nearly 70 percent, down from its $1,432 highs in early January. At that time, cryptocurrencies were estimated to make up 0.3 percent of world GDP.
Given cryptocurrencies small market influence, Goldman Sachs predicts that cryptocurrencies’ projected declines will not have any substantial impact on any other asset class.
“Importantly, we continue to believe that such declines will not negatively impact the performance of broader financial assets, because cryptocurrencies represent just 0.3% of world GDP as of mid-2018,” reads the report. “In fact, we believe that they garner far more traditional media and social media attention than is warranted.”
Historically, Goldman Sachs has expressed mixed interest in the cryptocurrency market. In December 2017, Goldman announced plans to open a bitcoin trading desk, and in May the bank revealed plans for a bitcoin trading operation. Two executives involved in the planned project gave an interview to the New York Times to discuss strategies to gain regulatory approval and risk assessment calculations. However, it appears Goldman Sachs will now be limiting its operations in the space.
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