Goldman Sachs: Some Cryptos Are Heading to Zero, While Other Might Emerge Out Stronger
The falling crypto markets over the past one month has got everyone talking out there about what could be the future of digital currencies and in which direction they are heading to. After a tremendous bull run last year, many imminent analysts and finial professionals have been talking about a “bubble” existing in the crypto markets and can burst anytime soon.
Steve Strongin, head of Global Investment Research at Goldman Sachs, shared some insights into the future of crypto markets and being straight in his response, he said that many cryptos are heading to ‘zero’ value. Just like many other analysts, one of the key arguments that Strongin made is that cryptocurrencies do not have any “intrinsic value” and he believes that it is highly “unlikely” that they would survive in the long run.
Expressing his views on this matter, Strongin said: "People seem to be trading cryptocurrencies as though they're all going to survive, or at least maintain their value. The high correlation between the different cryptocurrencies worries me. Contrary to what one would expect in a rational market, new currencies don't seem to reduce the value of old currencies; they all seem to move as a single asset class.”
He further continued saying "But if you believe this is a 'few-winners take-most' situation, then the potential for retirement depreciation should be taken into account. And because of the lack of intrinsic value, the currencies that don't survive will most likely trade to zero.”
Strongin made some very strong comparisons with the dot-com bubble of the 1990s and how many of the early ventures like pets.com and eToys.com ended up being just experiments making way for much larger enterprises like Amazon and Google.
Strongin said: “In hindsight, this period will probably end up looking like the internet bubble of the late 1990s. Very few companies that existed then went on to become even more valuable. Amazon did—but in a completely different form. Google—a big winner today—had only just been formed at the time.”
Strongin’s comments arrived of Feb 5 when there was a bloodbath-like situation in the crypto markets when the overall crypto market valuations slipped below $300 billion while Bitcoin was trading just above $6,000 levels, a decrease of more than 50% just in over a month’s time.
However, Strongin has praised the Bitcoin underlying technology saying that it clearly has a role in improving the existing ledgers and infrastructure underlying financial transactions. Strongin admits that it very difficult at the moment to predict a clear winner in the crypto space and which ones will stand the test of time ahead. He said: “Ultimately, I think new cryptocurrencies will emerge but of course time will tell.”