Goldman Sachs report: crypto is a new asset class
Goldman Sachs has issued a new report in which it explicitly defines cryptocurrencies as a new asset class.
Crypto, a new asset class – quite a comprehensive report by Goldman. pic.twitter.com/FP2sewJCTx
— Alex Krüger (@krugermacro) May 21, 2021
In this report, Goldman Sachs has gathered a number of opinions from cryptocurrency-related companies such as Galaxy Digital, Global FX and Chainalysis, as well as well-known critics such as economist Nouriel Roubini.
The really curious thing is that exactly one year ago he published another one in which he explicitly said that they were not an asset class.
What has changed in the last 12 months that has actually convinced Goldman Sachs to reconsider?
Goldman Sachs changes its mind on crypto
In the report, the bank’s researchers say they have noticed that many large cryptocurrencies are unique, and occupy a specific niche in the market. For example, Bitcoin is a highly capitalized currency, XRP is a real-time settlement system, Ethereum is a smart contract platform, Binance Coin is a token for practical applications, and Polkadot is a blockchain platform that can interact with other networks.
These intrinsic characteristics of each cryptocurrency allow it to attract a specific user base, and so for example the value of bitcoin is built around its use and distribution, so much so that, according to reports, massive inflows of institutional capital have recently confirmed the attractiveness of this cryptocurrency and the high degree of development achieved by its market. Furthermore, the limited issuance of BTC could be a way to protect against inflation and the devaluation of the fiat currency, while during the 2020 pandemic cryptocurrencies recovered faster from previous price levels, outperforming other asset classes.
Of course, the opinions of critics, such as Nouriel Roubini, are diametrically opposed, but Goldman Sachs analysts have also produced a chart showing that bitcoin has always bounced back to new highs in its history, no matter how deep the price declines have been over time.
Indeed, since the global financial markets collapsed in March last year, cryptocurrencies have managed not only to survive, but also to grow significantly over time, clearly showing resilience. Moreover, the main cryptocurrencies are now really proving to have real uses, albeit different ones, so that their use is now not only due to financial speculation.
Finally, it should be remembered that it is not only Goldman Sachs that has changed its mind recently about cryptocurrencies, also because the business around them is becoming increasingly interesting.