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Goldman Sachs: Bitcoin and cryptocurrencies are not an asset class

An internal document reveals that Goldman Sachs does not consider Bitcoin and cryptocurrencies as an asset class

It was a communication sent out to clients entitled “Cryptocurrencies Including Bitcoin Are Not an Asset Class”, in which Goldman Sachs warns that they are assets that:

  •  do not generate cash flow like bonds, 
  • do not generate gains from global economic growth, 
  • do not provide diversification benefits due to their unstable correlations,
  • do not reduce volatility, as their historical volatility is 76%. 

They also claim that there is no evidence that they can be used as a hedge against inflation, as assumed for example by Paul Tudor Jones of Tudor Investment Corporation. 

At this point they add: 

“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.

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”.

The second page of the disclosure states that cryptocurrencies can be used for illegal activities, including Ponzi schemes and ransomware, with an additional reference to the 17th-century Dutch tulip bubble.

This has caused an uproar on Twitter, with hundreds of reactions. 

For example, Cameron Winklevoss writes: 

“Bitcoin does “not generate cash flow like bonds.” Because it’s not a bond. And the sky is blue”.

And then he reiterates:

“Hey Goldman Sachs, 2014 just called and asked for their talking points back. Bitcoin was declared a commodity by the CFTC in 2015 in the Coinflip order…so yea it’s an asset whose price is set by supply and demand. Just like gold. Just like oil. It’s a commodity”.

His twin brother Tyler adds: 

“Goldman Sachs: In 2019, $2.8 billion in Bitcoin was sent to currency exchanges from criminal entities.

Fun Fact: Goldman Sachs facilitated $6 billion in money laundering via 1MDB scandal between 2012-13.

Double standard much?” 

Anthony Pompliano notes that nowadays there are even government bonds that not only do not generate cash flow but are in fact a cost. 

There are those who point out that Bitcoin’s market capitalization is twice that of GS, and those who recall that in the past GS actually wanted to open a trading platform for cryptocurrencies

Some even suggest that GS does not collect commissions when a client buys BTC. 

In fact, it is possible that Goldman Sachs may have some confusing ideas about Bitcoin. For example, a note by one of their analysts in August 2019 recommended considering buying bitcoin because it was believed that the short-term goal for the price of BTC was to reach $13,971.

At that time the price of BTC came out of a real rally, which took it from $3,500 at the beginning of the year to over $13,200 at the end of June. 

However, by the end of July, it had already dropped below $10,000 again, and in August, it tried to go back up to $12,000 and failed to do so, only to drop back to $10,000 in September. 

Since then, it has never been able to stabilize solidly above this figure again, and it hasn’t even reached $11,000. 

Marco Cavicchioli
Marco Cavicchioli
Born in 1975, Marco has been the first to talk about Bitcoin on YouTube in Italy. He founded ilBitcoin.news and the Facebook group" Bitcoin Italia (open and without scam) ".