We recently reported on Coin Digital that Goldman Sachs is setting up a cryptocurrency trading desk, but that doesn’t mean that the investment banking giant is being bullish on bitcoin price. In fact, it is the opposite of it.
According to the firm’s midyear economic outlook report, Goldman Sach’s investment strategists predict that despite the fact that the bitcoin lost over 60% of its price since December 2017, the bitcoin price will continue with its downtrend. The Chief Investment Officer, Sharmin Mossavar-Rahmani says that the firm’s view that the cryptocurrencies will not retain value still remains intact. In fact, they weren’t surprised that their prediction would come so much sooner than they expected.
The investment strategists added in 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.”
While that might be true, it is possible that they might be wrong. Because it is clear that bitcoin and other cryptocurrencies are clearly different than the fiat currencies that we are used to. So judging cryptocurrency by the same definition as we judge fiat currencies wouldn’t get us a real result (unless you are looking for a specific result).
If you need more evidence about how different cryptocurrencies are than fiat currencies, just think about the fact that there has never been a decentralized fiat currency in history. While cryptocurrency, on the other hand, are decentralized.
In fact, if you check out our previous report in which we talk about how the G20 regulations might boost blockchain development, there we mention how the central bankers are finding it hard to define cryptocurrency. So it is clear that we are still not sure where cryptocurrency fits in our legal/regulatory system.
Even though the firm is bearish for bitcoin, the Goldman analysts downplayed the concerns that a cryptocurrency market crash would spill into other equities markets. They also argued that right now bitcoin and other cryptocurrencies receive more media attention than their valuations deserve.
But there is still sunshine on Wall Street because Goldman’s bearish views toward cryptocurrency are not shared by its peers. In fact, just today, Intercontinental Exchange (ICE), the world’s largest stock exchange, and the owner of New York Stock Exchange (NYSE) announced that they will be launching a new company called Bakkt whose sole mission will be to make bitcoin a mainstream financial asset.