According to foreign media reports, Goldman Sachs maintains a pessimistic outlook on cryptocurrencies' near-term performance. In their mid-year economic report, Goldman Sachs Investment Management Group identified "crypto speculation" as one of six major factors contributing to market instability in the latter half of 2018.
Sharmin Mosaavar-Rahmani, Chief Investment Officer of Goldman Sachs Private Wealth Management, stated in Friday's report: "We believe these cryptocurrencies don't fulfill the three traditional roles of money, and consequently expect further declines ahead."
Bitcoin's Dramatic Fall From Peak Prices
Goldman Sachs reiterated its January stance that Bitcoin's rapid surge to $20,000 would make the dot-com bubble pale in comparison. Coindesk data shows Bitcoin has fallen approximately 60% since December 2017, trading around $7,470 as of Friday.
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Mosaavar-Rahmani emphasized: "Our position remains unchanged - cryptocurrencies in their current form cannot reliably store value. In fact, this reality has manifested faster than we anticipated."
Wall Street's Growing Skepticism
Major global investment banks increasingly view cryptocurrencies as failing all three monetary functions:
- Medium of exchange
- Unit of account
- Store of value
UBS echoed similar concerns Thursday, noting Bitcoin's extreme volatility disqualifies it as mainstream currency.
Minimal Systemic Impact...For Now
Mosaavar-Rahni contextualized crypto's financial significance:
- Cryptocurrencies represent just 0.3% of global GDP mid-2018
- Price declines unlikely to negatively impact broader financial assets
- Media coverage vastly disproportionate to actual economic impact
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The Institutional Crypto Paradox
Despite this skepticism:
- Goldman Sachs plans to launch Wall Street's first Bitcoin trading platform
- CEO Lloyd Blankfein acknowledged Bitcoin's potential future development
- The firm maintains openness while currently holding no Bitcoin positions
FAQ: Understanding Crypto Market Risks
Q: Why do investment banks view crypto as unstable?
A: Due to extreme price volatility, lack of intrinsic value, and failure to function as reliable money.
Q: How significant is crypto to global markets?
A: Currently minimal (0.3% GDP), but media attention suggests outsized perception.
Q: Does Goldman Sachs completely reject cryptocurrency?
A: No, they're developing institutional trading platforms while remaining cautious about retail speculation.
Q: What's the relationship between blockchain and Bitcoin?
A: Blockchain is the underlying technology with enterprise potential, while Bitcoin represents one volatile application.
Q: Should investors avoid all crypto exposure?
A: Institutional platforms may offer more regulated exposure, but retail speculation carries significant risk.