Goldman Sachs Expects Bitcoin to Decline Further From Here
Bitcoin has already corrected 65% after hitting it all-time high of $20,000 in mid-December 2017. However, it seems that Bitcoin and the overall crypto market has failed to gain the strength and investors’ confidence. For a long time, the world’s largest cryptocurrency has been swinging back and forth between $6000-$8000 levels.
Crypto enthusiasts have pinned their hopes on the entry of institutional players in the market which is further dependent on the arrival of Bitcoin ETF expected by this year-end. Last Friday, Goldman Sachs released a mid-year economic report where the financial banking giant notes that Bitcoin can further correct from these levels.
Goldman Sachs chief-investment officer Sharmin Mossavar-Rahamani said: “Our view that cryptocurrencies would not retain value in their current incarnation remains intact and, in fact, has been borne out much sooner than we expected. 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.”
The underpinning blockchain technology for digital currencies is considered to be a game-changer in the financial institution space because of its unique characteristics of transparent operations, effective databases and quicker transactions. However, Goldman Sachs continues to maintain a view that crypto assets won’t have any significant impact on other assets, for now.
The G20 also in its report recently said that cryptocurrencies don’t pose any significant risks to the global financial system and it could possibly mean that they have little dominance on the market. Mossavar-Rahmani also made investors aware regarding digital currencies’ existing value compared to the total financial market.
She said: "Such declines will not negatively impact the performance of financial assets because cryptocurrencies represent just 0.3 percent of world GDP as of mid-2018. In fact, we believe that they garner far more traditional media and social media attention than is warranted.”
However, when Bitcoin was sailing high in December 2017, Goldman Sachs had expressed its desire to start a crypto-trading desk. Three months back in May 2017, the company reiterated its stand while also adding that it plans to venture in Bitcoin Futures through its trading desk.
It remains to be seen as to how the markets take shape going further.