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Goldman Sachs Economy

Is Goldman Sachs Wrong About Bitcoin?

May 28, 2020

Yesterday, Goldman Sachs held a conference call discussing many topics about the current state of the economy. One of the topics addressed was Bitcoin and cryptocurrency. Prior to the call, the crypto community was mostly bullish thinking that Goldman would finally react positively to Bitcoin, similar to the recent news from Paul Tudor Jones. The price of Bitcoin even jumped past the $9k market from around $8800 to over $9100 USD prior to the conference call.

bitcoin goldman sachs
Bitcoin Price Chart

Right before the conference call, their slides were leaked and the crypto community became aware that Goldman Sachs was actually still negative towards Bitcoin and cryptocurrency. Here is the popular slide making the rounds on Twitter:

goldman sachs cryptocurrency
Goldman Sachs Cryptocurrency

It seems as though Goldman Sachs either doesn’t quite understand Bitcoin yet, didn’t do enough research, or doesn’t care to acknowledge its core qualities. Perhaps they know the potential but want to buy at a further discount. Let’s discuss some of the points made in this slide:

  1. Do Not Generate Cash Flow Like Bonds” – This one is pretty simple. Bitcoin is not a bond. Coins like Tezos offer staking opportunities.
  2. Do Not Generate any Warnings Through Exposure to Global Economic Expansion” – Bitcoin was created out of the 2008 financial disaster. It has risen from being worth $0 to $20,000 in 2017 which is less than 9 years while the economy has grown out of the 2008 recession. As more global expansion takes place, having a global currency makes more and more sense.
  3. The third and fifth point are very similar. Bitcoin is the hedge on so many levels other than price including scarcity, censorship resistant, durability, decentralized, and many other features. When it comes to price, Bitcoin is still so new and hasn’t experienced a real recession yet. During this current economic downturn, while stock prices fell, Bitcoin had one sudden drop but quickly recovered and has stayed within its current range consistently.
  4. Volatility can be looked at in many ways. Bitcoin being so new it is still experiencing price discovery. Many analysts and experts look at the volatility as a feature.

The crypto community was certainly not impressed by Goldmans presentation. Here are some tweets from some well known influencers in the crypto space.

Seems like Tone Vays believes it is a play to get Bitcoin cheaper. This does make sense as Goldman Sachs is an institution focused on making money not necessarily being 100% truthful.

Tyler Winklevoss had some good points regarding Bitcoin. He highlighted the double standard often talked about when it comes to illicit activity and cryptocurrency. Also, touched on a possible talent flippening where the smart minds are heading into the crypto space.

Another tweet from Spartan Black highlighted that the analysis was from a division that may lack research ability and may not reflect what others working at Goldman Sachs think.

All in all it seems not much has changed when it comes to Goldman Sachs versus crypto. Whether these beliefs are actually what is happening behind the scenes at Goldman or their really stacking sats, we will have to wait to find out.

5/5

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