Goldman Sachs’ analyst team just became the No.1 public enemy for much of the Bitcoin community. Under the given market dynamics, it was suggested that the largest digital asset is not a good investment opportunity, according to the company’s latest client conference call on May 27th, which also included Bitcoin‘s topic.
According to the revealed Slideshow, it was indicated by Goldman Sachs that Bitcoin is a not legitimate asset class because unlike bonds, the digital token does not generate cash flows. It was also suggested that the asset does not ‘provide consistent diversification benefits’ given they are uncorrelated to the traditional asset class.
Sharmin Mossavir-Rahmani, Chief Investment Officer for wealth management said during the conference call,
“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.”
The event was hosted by Goldman Sachs’ Investment Strategy Group, which is a part of the bank’s wealth management division that caters to high net worth clients and advises them on asset allocations.
Crypto Twitter unimpressed by Goldman Sachs
It goes without saying that Goldman Sach’s argument did not sit well with the Bitcoin community. Some of the reputed analysts in the space took keen notice of the criticism. Ryan Watkins of Messari stated,
“The criticisms were very cookie-cutter, the type you’d expect if someone just read mainstream headlines. It’s like they didn’t fully diligence the asset.”
Tyler Winklevoss, CEO, and Co-Founder of Gemini exchange had scathing remarks for the state of Wall Street amidst the Bitcoin comment. He said,
Crypto used to be where you ended up when you couldn’t make it on Wall Street. The quality of Goldman Sachs’ recent research on #Bitcoin demonstrates that there has been a talent flippening. Today, Wall Street is where you end up when you can’t make it in crypto.
— Tyler Winklevoss (@tylerwinklevoss) May 27, 2020
Additionally, Goldman Sach’s cash flow argument was peculiar as identified by Tom Masojada, Co-Founder of OVER Digital Asset Exchange. He highlighted that a list of investments labeled ‘suitable for clients’ by Goldman Sachs in the past did not generate cash flows and they were dependent on whether the client was willing to pay a higher price on a later date.
The current debacle will possibly gain more traction in the coming weeks as other proponents in the space with opined on Goldman Sach’s statement.