GOLD­MAN SACHS’ OPIN­ION ON BIT­COIN WILL CHANGE WITH TIME

AMBCrypto Weekly - - News -

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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