Goldman Sachs about cryptocurrencies

I read an interesting note today at the Financial Times.

On May 27, Goldman Sachs held a conference called "Forecastacross the US and the effects of current policies on inflation, gold and bitcoin. ”

The appearance of the word "bitcoin" in the name of the conferencewas perceived by many as a harbinger of adaptation by institutional cryptocurrency investors. However, at the conference, the bank ... stuck a knife into cryptocurrencies and turned it around.

The bank wrote: “Cryptocurrencies are not an investment class” and cited 5 reasons. Cryptocurrencies:

1. Do not generate cash flow like bonds.
2. Do not participate in global economic growth.
3. Do not carry diversification bonuses, i.e.Correlations are very volatile.
4. Do not smooth out volatility.Historical volatility on them is too high, and on March 12, 2020, bitcoin fell by 37%.
5. Do not show signs of insurance against inflation.

And they turned the knife with such a statement: “We do not think that a tool whose growth can occur only on the expectation that someone else will pay a high price for it is suitable for our customers.”

And then they poked again: “Cryptocurrencies contribute to illegal activities”

The presentation can be downloaded here:
resources.goldman.com/content/dam/pwm/direct-links/isg-calls/client_call_materials_27May20.pdf?sa=n&rd=n

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