Leading global investment bank Goldman Sachs has expressed a cautious stance on the future performance of cryptocurrencies, particularly Bitcoin. In its mid-year economic assessment, the firm highlighted speculative crypto trading as one of the key factors likely to contribute to market instability in the coming months.
Why Goldman Sachs Is Bearish on Bitcoin
Sharmin Mosaavar-Rahmani, Chief Investment Officer for Goldman Sachs Private Wealth Management, reinforced the bank’s position in a recent report. She stated:
"We do not believe cryptocurrencies currently fulfill the three traditional roles of money. As a result, we anticipate further price declines in the near future."
This echoes sentiments shared earlier this year in the bank’s annual investment outlook, where analysts compared Bitcoin’s rapid climb to nearly $20,000 to the infamous dot-com bubble—only more extreme.
Current Bitcoin Market Performance
According to data from industry tracking sites, Bitcoin’s value has fallen significantly since its peak in December of last year. As of last Friday, it was trading around $7,470, reflecting a decline of approximately 60% within six months.
Mosaavar-Rahmani emphasized that cryptocurrencies in their present form are ineffective as a store of value—a perspective that hasn't changed since the beginning of the year. She noted that this weakness has become apparent even faster than the bank had initially predicted.
Broader Institutional Skepticism
Goldman Sachs isn’t alone in its criticism. Other major international financial institutions have expressed similar concerns, arguing that cryptocurrencies currently fail as:
- A medium of exchange
- A unit of account
- A reliable store of value
Just one day before Goldman’s report, UBS released a commentary describing Bitcoin as far too volatile to function as a mainstream currency.
The Real Impact of Crypto on Broader Markets
Despite the attention cryptocurrencies receive, Mosaavar-Rahmani was quick to contextualize their actual economic weight:
"A decline in cryptocurrency prices is unlikely to negatively impact broader financial assets. By mid-2018, cryptocurrencies accounted for only about 0.3% of global GDP. In reality, the level of attention they attract in traditional and social media far exceeds their actual economic significance."
This suggests that while crypto markets may be emotionally influential, their systemic financial impact remains limited.
Wall Street’s Mixed Signals
Interestingly, despite its public skepticism, Goldman Sachs has been exploring opportunities within the crypto space. Earlier reports indicated that the bank plans to launch a Bitcoin trading platform, potentially becoming the first major Wall Street firm to do so.
CEO Lloyd Blankfein commented in June that although he does not personally hold Bitcoin, he remains open to the possibility that cryptocurrencies could evolve and play a larger role in the future.
This dual approach—caution in analysis but openness in innovation—reflects the broader uncertainty and competitive interest surrounding digital assets in the institutional financial world.
Frequently Asked Questions
Why does Goldman Sachs expect Bitcoin to fall further?
Goldman analysts believe Bitcoin does not perform the key functions of money—like storing value or serving as a medium of exchange. Without these, they see little fundamental support for its current valuation.
How has Bitcoin performed recently?
Since December 2017, Bitcoin’s price has dropped nearly 60%, trading around $7,470 as of last week. This decline aligns with growing regulatory and institutional skepticism.
Do other banks share Goldman’s view?
Yes. Major banks like UBS have also raised doubts about Bitcoin’s viability as a currency, citing extreme volatility and lack of widespread acceptance.
Does cryptocurrency affect the global economy?
Currently, crypto assets represent a very small portion of global GDP—about 0.3%. While they attract significant media attention, their direct impact on traditional financial markets remains limited.
Is Goldman Sachs involved in crypto despite its criticism?
Yes. The bank has explored launching a Bitcoin trading platform, indicating a strategic interest in crypto infrastructure despite its cautious public outlook.
Should retail investors be worried?
Retail investors should exercise caution, conduct thorough research, and consider the high-risk, speculative nature of cryptocurrency investments. Always consult with a financial advisor before making significant investment decisions.
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