The World’s Second Largest Investment Bank: Growing Bitcoin Acceptance Does Not necessarily Make Its Holders Wealthy

Goldman Sachs, the world’s second-largest investment bank with a long history of opposition to digital currencies, said in a recent statement that prices could remain stable as more bitcoins and digital currencies are accepted.

To Report CryptoGlobe Goldman Sachs experts have recently warned that investors should not expect increased acceptance of digital currencies to make them richer. The investment firm also said its analysts speculate that prices may not rise as acceptance increases.

Goldman Sachs analysts Zach Pandl and Isabella Rosenberg recently published a note noting that digital currencies such as bitcoin have seen good growth in recent years, and to some extent correlated with value growth. Other asset classes have also been observed.

They added that the price of bitcoin appears to be positively correlated with the price of items related to the Consumer Cost Index, such as crude oil, as well as the headline inflation and stocks of technology companies. All of these assets are negatively correlated with the real interest rate and the value of the US dollar in world markets; That is, they move in opposite directions.

The recent sell-off in the digital currency market coincided with broader sell-offs in the stock market, causing the Nasdaq stock index to lose about 14% of its value in 30 days. At the same time, Bitcoin fell 21 percent.

Goldman Sachs analyst writes:

This issue (referring to the acceptance of digital currencies) while it may increase prices, may also increase the correlation of digital currency prices with other variables related to financial markets. In this case, it is no longer possible to rely on digital currencies as an asset class to diversify the capital portfolio.

The dollar has recently risen under the influence of the Federal Reserve’s contractionary monetary policy and other central banks around the world. In addition to digital assets, the Federal Reserve’s recent stance has also affected the stocks of technology companies.

The analysts estimate that “further development of China’s blockchain technology, including applications in Metavars, may make the trend of digital currency price changes somewhat predictable.” Goldman Sachs analysts, however, said the assets “would not be immune to macroeconomic factors, including the central bank’s contractionary monetary policy.”

They had recently estimated that if bitcoin was used more in investments than gold and the market share of anti-inflation assets was taken out of gold, its price could rise to $ 100,000 in the future.