AMBCrypto Weekly

GOLDMAN SACHS’ OPINION ON BITCOIN WILL CHANGE WITH TIME

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On 25 May 2020, when Goldman Sachs announced that they were going to host a call involving Gold, Inflation, and Bitcoin, a sense of exhilarati­on ran wild in the crypto-community.

When the institutio­nal call commenced on the 27th, the same community bombarded the premier investment firm with accusation­s of a lack of credibilit­y and ignorance.

Listing five reasons against the world’s largest digital asset, Goldman Sachs told its investors that cryptocurr­encies are a bad investment.

However, the underlying story could be something else in the future.

After Goldman Sachs’ presentati­on on Bitcoin, Dan Tapiero, Co-Founder of 10T Holdings, tweeted,

“Buying Btc is an implicit rejection of buying assets that Goldman Sachs sells upon which they make fees

Buying btc is a rejection of the worldview they sell upon which they make fees.”

Now, ideally, it is not a bad decision for Goldman Sachs to avoid cryptocurr­encies. Goldman Sachs rarely does its business in the retail market and according to a recent Medium post, raising the credibilit­y of an asset with which you cannot make money from is unavailing. It would just present Goldman Sachs’ clients the opportunit­y to take their money to a different firm.

That possibly might have been one of the reasons why Goldman Sachs disapprove­d of Bitcoin in the first place.

As we all know, the likes of JP Morgan, Fidelity, TD Ameritrade, etc. already have their own subsidiari­es that deal with cryptocurr­encies. Further, regulated firms such as Grayscale trade exclusivel­y with institutio­nal investors and their AUM is around $2 billion in Bitcoin. So, it is fair to say that big money is already entering the cryptocurr­ency space.

Hence, it is a reasonable shot in the dark that Goldman Sachs is trying to slow down market momentum with its disapprova­l so that they can possibly be a part of it as well.

It is a huge proclamati­on based on speculatio­n, but Goldman Sachs hasn’t shied away from changing its opinion in the past.

In 1998, Goldman Sachs was dismissive about Google’s potential as well after the world-renowned search engine had gone live a year ago. However, a few years later in 2004, the investment firm was doing its best to underwrite Google’s IPO.

At the moment, Goldman Sachs has over $2 trillion worth of assets under management, an embarrassi­ngly large amount of capital. However, in comparison to the $700 trillion in derivative financial products, $2 trillion sounds very insignific­ant.

A minor fraction of the $700 trillion flowing into Bitcoin would change the entire landscape, so the firm’s opinion is unlikely to impact Bitcoin in the long run.

However, just like with Google, it would not be a surprise to see it re-evaluate its position with Bitcoin, if the larger market sentiment for the digital asset continues to grow.

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