Goldman Sachs Says Cryptocurrencies are not an Asset Class

Goldman Sachs was reportedly launching a bitcoin trading desk back in 2017-2018 when the crypto markets were at their peak of popularity; late last week the company hosted a conference call where they listed five reasons that cryptocurrencies including bitcoin are not an asset class; the reasons include do not generate cash flow like bonds, do not generate any earnings through exposure to global economic growth, do not provide consistent diversification benefits given their unstable correlations, do not dampen volatility given historical volatility of 76% – on March 12, 2020, the price of bitcoin fell 37% in one day and do not show evidence of hedging inflation; the call was met with contempt by the crypto community who say the bank is living in the past; Goldman Sachs also said a security whose appreciation is entirely dependent on whether someone is willing to a higher price is not a suitable investment for the bank’s clients. Financial Times

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