Goldman Sachs Endorses Bitcoin As New Asset Class

Key Takeaways

• Goldman Sachs (NYSE:GS) has published a report about Bitcoin's potential.
• The report includes comments from several Goldman Sachs members, including Head of Digital Assets Matthew McDermott.
• Goldman Sachs launched a cryptocurrency trading desk for institutional investors earlier this month.

Financial giant Goldman Sachs has acknowledged Bitcoin as a new asset class in comments made alongside a recent research report.

McDermott Says Bitcoin Is Investable Asset

The report includes comments from Goldman Sachs members, including GS Global Head of Digital Assets Matthew McDermott.

McDermott states that “Bitcoin is now considered an investable asset.” He added that Bitcoin “has its own idiosyncratic risk” due to its novelty and due to the fact that its price activity doesn’t behave as expected when it is compared to other assets.

McDermott continued by noting that Bitcoin “has tended to be more aligned with risk-on assets.” He also says that “clients and [others] are largely treating [Bitcoin] as a new asset class.”

Elsewhere, GS commodity analyst Mikhail Sprogis and GS Head of Commodities Research Jeff Currie argued that cryptocurrencies can act as a store of value “only if they have other real world uses.” They added that value is determined by each network’s size and growth along with the information those networks verify.

Other Experts Comment on BTC

GS Senior Multi-Asset Strategist Christian Mueller-Glissman suggested that if Bitcoin’s risk/reward ratio continues, it could become an asset that adds value to investor portfolios.

Finally, GS co-head of Globax FX, Rates, and EM Strategy Zach Pandl argued that potential Bitcoin adoption will come from its “strong brand” alongside security, privacy, and other features.

The report also features features additional comments from several industry leaders including Michael Novogratz, CEO of Galaxy Digital, and Michael Sonnenshein, CEO of Grayscale Investments.

Goldman Sachs Moves Into Crypto

Goldman Sachs’ report comes alongside its plans to move into the cryptocurrency business. On May 7, the company revealed that it had executed its first crypto trade through its long-awaited trading desk.

The company previously planned to introduce cryptocurrency products and services in 2018, but those efforts were stalled.

Goldman Sachs joins several other financial giants in offering cryptocurrency services. Other notable banks with crypto offerings include JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC), and BNY Mellon (NYSE:BK).

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