Goldman Sachs, an American multinational investment bank, flip-flopped again after allegedly diminishing crypto assets as a viable investable class. The Wall Street bank made another U-turn on its stand towards Bitcoin in the same week it expanded its cryptocurrency trading desk.
The bank confirmed its ambivalence towards cryptos in a report published earlier this month that claimed cryptos are not a “viable investment”.
The report, titled “Digital Assets: Beauty Is Not in the Eye of the Beholder”, concluded that Bitcoin is not “a long-term store of value or an investable investment class”.
This report title comes contrary to an earlier May 21 publication that wrote “Crypto: A New Asset Class”. The earlier report mainly focused on positive ideas toward crypto and also featured Matthew McDermott, the global head of digital assets at Goldman Sachs, saying:
“Bitcoin is now considered an investable asset”.
That was the opinion of Goldman Sachs’ presentation in 2021 where different analysts from the company provided reasons explaining why Bitcoin is not an asset class suitable for investment.
According to the new report, the bank’s Investment Strategy Group mentioned that this time around it wanted to proceed cautiously when exploring the crypto space. The report read:
“We have refrained from repeating the positive and negative hype that surrounds this ecosystem because we do not want clients to be seesawed, even swayed by a cacophony of assertions, many of them unsubstantiated.”
The Investment Strategy Group insisted that Bitcoin is not “digital gold, but in any case, Gold, the precious yellow metal was not a reliable store of value”, adding:
“The argument that Bitcoin and cryptocurrencies are a digital version of gold does not confer any value to Bitcoin and other cryptocurrencies, because gold itself is not a consistent or reliable store of value.”
Moreover, the report indicated that blockchain networks are also not trustworthy, concluding that cryptos and blockchain technology are “built on layers of trust that could be eroded”.
“After analyzing various valuation methodologies and applying our multi-factor strategic asset allocation model, we have concluded that cryptocurrencies are not a viable investment for our clients’ diversified portfolios.”
Interestingly, there are divisions within the bank about its approach to the crypto sector. In May, Goldman Sachs led a $15 million investment round for blockchain analytics firm, Coin Metrics.
On June 14, 2021, reports emerged that McDermott had confirmed that the investment bank was expanding its crypto desk to include Ethereum options and futures.