2024-04-16 21:16:00
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Bitcoin has been strong so far this year and has even reached a new all-time high. But while some major financial players have now opened up to cryptocurrencies and, for example, launched Bitcoin spot ETFs, the US investment bank Goldman-Sachs remains an avowed crypto skeptic. Bitcoin and Co. are not an asset class, a well-known GS banker recently said against the crypto sector.
• Influential GS banker remains skeptical about cryptocurrencies
• Cryptos are said to be worthless and have no status as an asset class
• Goldman Sachs clients apparently aren’t asking about crypto investments
Sharmin Mossavar-Rahmani has been CIO of Goldman Sachs’ asset management division for 23 years and is considered an outspoken crypto critic. In an interview with the “Wall Street Journal” she recently reiterated her skepticism about Bitcoin and Co. Despite the launch of Bitcoin spot ETFs by competitors such as BlackRock and Fidelity and the recent rally in the crypto market that drove Bitcoin to a new all-time high above the $70,000 mark, she remained convinced that cryptocurrencies are not asset class and would have no real value.
Crypto sector is “hypocritical”: Goldman Sachs with strong criticism of Bitcoin and Co.
Mossavar-Rahmani and colleagues from the investment bank Goldman Sachs had already published a detailed crypto criticism in June 2021. According to the Wall Street Journal, she argued that Bitcoin was too volatile to serve as a reliable medium of exchange and that it was unlikely to be used on a large scale. Although a lot has happened in the cryptocurrency market since then, the banker remained as skeptical about Bitcoin as ever in an interview with the news site published in early April: “We don’t believe in crypto,” said Mossavar-Rahmani. “We don’t think it’s an asset class.”
Despite the recent crypto rally and the associated increases in the value of Bitcoin, Ether and Co., the Goldman Sachs banker continues to believe that cryptocurrencies are actually worthless. Bitcoin creates “absolutely no value in any form,” criticized Mossavar-Rahmani to the “WSJ”. “People who [Kryptowährungen] buy, have to rely on someone else’s willingness to buy them at a higher price. “This is reminiscent of past manias such as tulip fever in the 1600s,” said Mossavar-Rahmani. She also argued that it is almost impossible to accurately value cryptocurrencies using financial methods because they generate no income, cash flow and dividends. ” If you can’t assign value, how can you be bullish or bearish?” she said in an interview with the WSJ.
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The CIO of the GS asset management department admitted that the criticisms mentioned also apply to gold, but the yellow precious metal has proven its popularity as an investment and for jewelry in the past. However, this does not necessarily result in an argument for cryptocurrencies. “At least you can hold onto and store physical gold; you can’t do that with crypto,” she says – and besides, Goldman Sachs wealth management wouldn’t encourage customers to own gold anyway. This means that Sharmin Mossavar-Rahmani’s clients may have missed out on two record rallies in the last few months.
But that’s not all the criticism from Mossavar-Rahmani. She also told the Wall Street Journal that the crypto industry is “hypocritical” because it claims to democratize finance while ultimately only a few people have control and make the most important decisions. “The rule of law and systems of checks and balances are important,” she said, defending the existing monetary system, which is often viewed by crypto advocates as unfair, unstable and outdated.
The behavior of Goldman Sachs customers when it comes to cryptocurrencies raises questions
The behavior of Goldman Sachs customers is apparently influenced by the financial institution’s negative attitude towards cryptocurrencies. Mossavar-Rahmani emphasized in the WSJ interview that her customers knew about her team’s attitude towards Bitcoin and Co. and would not ask to enter the crypto market. However, whether this lack of demand from GS customers is actually due to the fact that the customers themselves share this assessment and want nothing to do with cryptocurrencies, or whether they just don’t ask because they know that they won’t get anywhere with the investment bank in this area and instead have corresponding investments managed by the competition remains an open question.
In any case, other large players such as the US investment company BlackRock apparently cannot complain about a lack of customer demand for cryptocurrencies. Robert Mitchnick, who heads the digital assets department at BlackRock, recently explained to “Yahoo Finance” how the investment company has slowly opened up to Bitcoin and Co. over the years – also due to increasing customer demand. “As this asset class has evolved over several years from an infrastructure perspective, from a regulatory perspective, from a client interest perspective […] has developed further, you could see how our strategy has also developed and brought us to the point where we are today.” And that is that when it comes to accessing Bitcoin, investors clearly choose the iShares Bitcoin Trust (IBIT), BlackRock’s Bitcoin spot ETF, says Mitchnick. It’s possible that some of these investors are also Goldman Sachs customers.
These digital assets could have a future, according to Goldman Sachs
But Sharmin Mossavar-Rahmani from Goldman Sachs is not only negative about digital assets, despite all the criticism. She told the Wall Street Journal that she and her colleagues would definitely see some advantages in converting assets such as real estate into digital tokens. According to Mossavar-Rahmani, digital central bank currencies could also ultimately be useful – unlike Bitcoin, Ethereum and Co.
Editorial team finanzen.net
Image source: Natali_ Mis / Shutterstock.com, Gil C / Shutterstock.com, Gajus / Shutterstock.com
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