Last week, a presentation from the wealth management division of Goldman
But, the ostensibly pessimistic stance of Goldman Sachs towards Bitcoin does not entirely reflect the bank’s perception of cryptocurrencies.
To properly evaluate the position of Goldman Sachs on Bitcoin, three factors have to be considered: its historical statements about crypto, reports on the exploration of a BTC trading desk, and the fact that the recent presentation came from a single division.
On May 28, during a discussion about Bitcoin, gold, and inflation, the Goldman Sachs wealth management division said Bitcoin is not a “suitable investment for our clients.”
One slide of the presentation read:
“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.”
According to Ethan Vera, former investment banker at Goldman Sachs and current executive at a crypto mining firm, the perception of Bitcoin by one division does not necessarily mirrors the bank’s viewpoint.
The crypto executive noted that the principal strategic investments group is “completely separate” from the wealth management division that gave the presentation.
“I really do think Goldman is further ahead than most of the other Banks on Bitcoin.”
Similar to many hedge funds and investment firms, Goldman Sachs is taking a cautious stance on Bitcoin. The dominant cryptocurrency’s market capitalization still stands at merely $178 billion, which is less than 3% of gold’s.
In recent months, an increasing number of institutional investors have started to invest in Bitcoin.
Grayscale, an investment firm that allows institutions to invest in Bitcoin through publicly-tradable investment vehicles, said it recorded $503.7 million in investments in the first quarter of 2020.
A staggering 88% of the investments came from institutional investments, “dominated by hedge funds” according to Grayscale.
It seems the growing institutional demand for Bitcoin from hedge funds since January 2020 prompted Goldman Sachs to release a presentation about Bitcoin to its clients.
Since 2015, Goldman Sachs made several moves that portrayed the bank’s cautiously optimistic attitude…