Goldman Sachs Outlines Poor Understanding of Bitcoin to their Investors


While Bitcoin has been steadily growing in the world of mainstream investment and understanding, those who are looking at investing in the space for the first time and are used to more traditional assets are still proclaiming some odd information about the nascent space. 

It is true that Bitcoin is not like many other investable assets, and it has different people putting up different ideas on what the coin is actually good for in the traditional space. But as it stands most people are still primarily focused on investing in it. 

Yet, despite the interest, and the growth of platforms like CBE and Bakkt, Goldman Sachs, who have shown their own interest in Bitcoin, still don’t feel like it’s an asset. Goldman Sachs held an investor call to discuss current policies for Bitcoin, gold and inflation in the context of the COVID-19 crisis but their understanding of the coin was lacking.

Poor analysis

Bitcoin has been subject to some less than knowledgeable analysis from big institutions before, but this has been falling as more effort is taken to understand, but the recent analysis from Goldman has many cryptocurrency people scratching their heads. 

“The criticisms were very cookie cutter, the type you’d expect if someone just read mainstream headlines,” said Ryan Watkins, Bitcoin analyst at Messari and former investment banking analyst at Moelis & Company. “It’s like they didn’t fully diligence the asset.”

Goldman’s cash flow argument was particularly odd to Tom Masojada, co-founder of OVEX Digital Asset Exchange. 

“Many investments that Goldman labels as ‘suitable for clients’ do not generate cash flows and are primarily dependent on whether someone is willing to pay a higher price at a later date,” he said on Twitter.

“One could argue bitcoin isn’t backed by anything, but to liken it to a game of hot potato ignores the subjective value such a novel asset provides,” said Kevin Kelly, former equity analyst at Bloomberg and co-founder of Delphi Digital. ”The demand for an apolitical speculative asset that may or may not turn out to be one of the world’s most valuable safe havens.”

Time for Bitcoin?

The current situation with the ongoing pandemic would appear to be well suited to a major shake up and change in the traditional markets which are suffering as it stands, and are due to suffer even more in the long term after this. 

However, Bitcoin has shown its longevity and potential in a space that is under pressure. So, although it is new and not too well understood, it would be a good opportunity for traditional institutions to begin their drive towards better understanding this new asset. 

Darryn Pollock
Darryn has been interested in the blockchain and cryptocurrency space since he heard about Bitcoin in 2015. He then decided to use his journalism degree to report on this fascinating fintech space in 2016, and has not looked back since.

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