Report: Goldman Sachs researching cryptocurrencies as an asset class

Major U.S. investment bank Goldman Sachs appears to have recognized that cryptocurrencies are an emerging new asset class, according to a recent report from the bank, despite stating just a year ago that Bitcoin was “not an asset class” or “a suitable investment.”

Economist Alex Krüger tweeted that Goldman Sachs turned to cryptocurrency-related companies such as Galaxy Digital, Global FX and Chainlaysis, as well as critics such as Nouriel Roubini, seeking their opinions and views.

The bank's researchers pointed out in the report that many large cryptocurrencies are unique and deserve to occupy a place in the market. For example, Bitcoin is a highly capitalized currency, Ripple's XRP is a real-time settlement system, Ethereum is a smart contract platform, Binance Coin is a token for actual applications, and Polkadot is a blockchain platform that can interact with other networks.

Goldman Sachs added that, therefore, the inherent characteristics of each cryptocurrency enable it to attract a specific user base. Analysts say that the value of Bitcoin depends on its use and distribution. Galaxy Digital CEO Mike Novogratz pointed out that from this perspective, the influx of large amounts of institutional capital confirms the attractiveness of cryptocurrencies and the high level of market development.

Michael Sonnenschein, CEO of Grayscale Investments, echoed the sentiment, calling Bitcoin’s limited supply “a way to hedge against inflation and currency debasement.” He also noted that while cryptocurrencies have not escaped the turmoil during the 2020 pandemic, they have recovered faster and outperformed other asset classes.

However, Nouriel Roubini, an economics professor at New York University, said he completely disagrees with the idea that something with no income, no utility, or no relationship to economic fundamentals can be considered a store of value or an asset. He also doubts whether most institutions are willing to take on the volatility and risk of cryptocurrencies, as the volatile price action in recent days has reminded people of.

Goldman Sachs analysts also compiled a chart showing all the ups and downs in Bitcoin's history, which shows that since 2013, no matter how deep the drop was, Bitcoin has always rebounded to new highs.

Notably, Goldman Sachs stated a year ago that cryptocurrencies were not an asset class.

However, Goldman Sachs has since announced that it will offer Bitcoin and other cryptocurrencies to its private wealth management group and has even launched a crypto trading team.