Goldman Sachs Says Bitcoin Is Not an Asset Class


Goldman Sachs analysts are no longer buying the idea that Bitcoin — or any cryptocurrency — should be seen as an asset class for the firm’s clients.

May 27 2020 | AtoZ MarketsAmerican multinational investment bank, Goldman Sachs in a conference call at 10:30 AM EDT told its clients to stay away from Bitcoin and cryptocurrencies, as these new-age investments do not qualify as an asset class.

The New York headquartered-bank reportedly issued that advice in its more than a week-long advertised call today May 27 entitled “US Economic Outlook & Implications of Current Policies for Inflation, Gold and Bitcoin.”

Goldman Sachs denies Bitcoin is an asset class

During a client-facing call on Wednesday, the investment bank presented a case that cryptocurrency is not a viable investment vehicle under the current economic environment.

“Cryptocurrencies including Bitcoin are not appropriate as an asset class,” the bank’s analysis stated in a slide shared with call participants.

The deck pointed to cryptocurrencies’ volatile price movements, its unstable correlations with other asset classes and the lack of evidence that it can serve as an inflation hedge as some of the major reasons.  Some of them may also be securities.

“We believe that a security whose appreciation is primarily dependent on whether someone else is willing to pay a higher price for it is not a suitable investment for our clients,” the deck stated.

The call also throws cold water on hopes that Goldman Sachs may be planning to expose its investors to Bitcoin and other cryptocurrencies.

“We also believe that while hedge funds may find trading cryptocurrencies appealing because of their high volatility, that allure does not constitute a viable investment rationale.”

It further claims that Bitcoin can be a conduit for illicit activity.

“Despite that most cryptocurrency ledgers are permanent and auditable public records, cryptocurrencies nevertheless abet illicit activities such as Ponzi schemes, ransomware, money laundering and darknet markets,” the slides reads.

Is Goldman Sachs’ statement negative for Bitcoin?

Some users on social media have interpreted this situation quite negatively. A user named Bitcoinaire interprets this as “So Goldman Sachs thinks the price of Bitcoin will drop to zero”. But Goldman Sachs’ statement is actually not that negative.

Today, when it comes to the asset class, stocks and commodities come to mind. For example, gold or silver is not an ‘asset class’. But we all know that gold and silver are not worthless. Just because Bitcoin and other cryptocurrencies are not a special asset class does not mean that they are ‘worthless’.

What do you think of Goldman Sachs’ statement denying Bitcoin as an asset class? Share your thoughts with us in the comments section below.

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