Goldman Sachs Hosts Conference Call On Crisis, Bitcoin, And Inflation
Goldman Sachs will soon host a conference call discussing the impacts of the current economic crisis on Bitcoin, gold, and inflation. Goldman Sachs Hosts Conference Call On Crisis, Bitcoin, And Inflation
Goldman Sachs will host a conference call on May 27 titled US Economic Outlook & Implications of Current Policies for Inflation, Gold, and Bitcoin.
On May 23, Mike Dundas, the founder of crypto media outlet The Block, posted a screenshot of the invitation for the call, revealing that the event will be hosted by Sharmin Mossavar-Rahmani, the CIO of Goldman’s Investment Strategy Group, alongside Harvard economics professor Jason Furman, and Goldman Sachs’ chief economist Jan Hatzius.
Goldman Sachs Appears To Be Warming To Bitcoin
The news has been heralded as a milestone for the institutional adoption of crypto assets, appearing to signify a complete u-turn on the part of Goldman’s Mossovar-Rhami — who stated that cryptocurrencies fail as mediums of exchange, stores of value, and units of measurement, in August 2018.
For many years, the crypto community has appeared dedicated to willing cryptocurrency engagement from Goldman Sachs into existence, with false rumors that the financial giant planned to open a Bitcoin (BTC) trading desk circulating at frequently throughout the short history of cryptocurrency.
Institutions Increasingly Embrace Crypto
Goldman Sachs’ conference call comes amid other signs that many top financial institutions may be warming to crypto, with JPMorgan providing banking services to U.S. exchanges Coinbase and Gemini since April.
At the start of May, billionaire and hedge fund founder, Paul Tudor Jones, revealed that he is purchasing Bitcoin as a hedge against money printing-induced inflation.
The 65-year-old revealed that his Tudor BVI hedge fund is hodling “a low single-digit percentage” of its total assets in BTC futures, stating; “The best profit-maximizing strategy is to own the fastest horse […] If I am forced to forecast, my bet is it will be Bitcoin.”
Goldman Sachs Butts Heads With Bloomberg Over Bitcoin
Goldman Sachs starkly disagrees with Mike Bloomberg on cryptocurrency as an asset class worthy of investment interest.
According to a leaked PowerPoint slide, Goldman Sachs, in a May 27 call discussing the U.S. economic outlook, stated that cryptocurrencies are not an asset class. The wording of the slide appears to discourage its clients from investing in the up and coming technology-based asset. This stands in stark contrast to the views of former presidential hopeful, Michael Bloomberg, whose financial reform plan unequivocally called Bitcoin an asset class.
Bloomberg: Better Than Gold
Michael Bloomberg’s Plan Openly Acknowledged Cryptocurrency As A Major Asset Class. It Also Called For A Transparent Regulatory Framework:
“Cryptocurrencies have become an asset class worth hundreds of billions of dollars, yet regulatory oversight remains fragmented and undeveloped. For all the promise of the blockchain, Bitcoin and initial coin offerings, there’s also plenty of hype, fraud and criminal activity.”
It should be noted that most, if not all, of the alleged criticisms of Bitcoin (BTC) by Goldman Sachs could also be levied against other established assets, such as gold. Notably, Bloomberg analyst Mike McGlone, who is frequently bullish on the cryptocurrency, believes Bitcoin to be a better store of value than gold because of the inelastic nature of its supply:
“Unlike quasi currency brethren gold, higher prices won’t be an incentive for more supply.”
‘What Are You Smoking?’ Winklevoss Pans Goldman Sachs Bitcoin Bashing
Tired claims that Bitcoin and cryptocurrencies are not an asset class say more about Goldman Sachs and the banking system itself, proponents argue.
Bitcoin (BTC) supporters have widely panned Goldman Sachs after it emerged that the banking giant does not consider it as a real asset class.
Materials from an investor call on May 27 revealed that the United States’ fifth-largest bank is dismissive of the largest cryptocurrency.
Goldman Wheels Out Legacy Bitcoin Complaints
The main reason for the continued lack of attention, Goldman says, is that Bitcoin does not generate revenue flows for holders, for example, in the same way that stocks and bonds do.
“We believe that a security whose appreciation is primarily dependent on whether someone else is willing to pay a higher price for it is not a suitable investment for our clients,” a related PowerPoint presentation states.
Along with other claims including high volatility, the criticism is nothing new, Bitcoin having faced years of identical scorn from the legacy banking sector. Just last week, wealth manager Peter Mallouk told CNBC that despite its recent returns, there was “no need” for any investors to buy Bitcoin.
Goldman’s tone meanwhile riled some of the best-known figures in the Bitcoin industry and beyond.
Reacting, D-TAP capital founder Dan Tapeiro argued that the bank was simply concerned about its revenue stream.
“Goldman Sachs does not make fees when a client buys #bitcoin. Buying Btc is an implicit rejection of buying assets that Goldman Sachs sells upon which they make fees,” he wrote on Twitter.
Buying btc is a rejection of the worldview they sell upon which they make fees. Long PTJ/Short GS EVERY TIME.
Gemini exchange co-founder Tyler Winklevoss meanwhile argued that the attention being paid to Bitcoin suggested a longer-term shift was underway.
“Crypto used to be where you ended up when you couldn’t make it on Wall Street,” he tweeted.
The quality of Goldman Sachs’ recent research on #Bitcoin demonstrates that there has been a talent flippening. Today, Wall Street is where you end up when you can’t make it in crypto.
In another post, Winklevoss took issue with Goldman’s understanding.
“Me: What are you smoking? I thought Goldman was the bank on Wall Street for smart bankers,” he wrote.
Others simply reiterated that Bitcoin was immune to naysayers, as evidenced in recent years by high-profile criticism impacting the price less and less.
“In all honesty most of their arguments were cookiecutter,” School of Arms Media CEO, John Bednarski summarized.
What Goldman Gets Wrong About Bitcoin (From Someone Who Used to Work There)
When I worked at Goldman Sachs, one of the running jokes among those around me was that I spent more time trading bitcoin than the bonds I was meant to be covering. Back in 2013, bitcoin was not taken very seriously among my colleagues. Even seven years later, I did not expect much to have changed. So, as I started reading and listening to the Goldman Sachs research piece on bitcoin Wednesday, I was pretty sure I knew where it was going.
The report begins with an overview of the state of the U.S. economy and projections as to what it may look like in a post-COVID-19 world. In particular, the report emphasizes that inflation is unlikely to be something to worry about anytime soon. Dollar demand remains strong and indicators show the pandemic has had effects that are, if anything, deflationary in nature. As I’ve written before, I think this is largely true for the short-to-medium term.
Goldman’s research then goes on to make a largely data-driven argument against investing in gold. Not only do we not have to worry about inflation, it says, but even if we did, gold would not be a great investment. Gold has not consistently outperformed inflation whereas equities have.
Similarly, U.S. Treasury bonds tend to offer a much better return in market downturns than gold. It turns out that gold does not always, or even often, behave as advertised. There are better options. The value of gold as an asset class has largely been driven by historical narrative – and that narrative does not line up with reality.
This is all reasonable. And as I say, I thought at this point that I knew where this was going. I believed the talented team of Goldman research analysts was about to break down bitcoin in a similar way. The story that has been told around bitcoin as an inflation hedge does not line up to the reality of how bitcoin has performed over the course of its albeit brief life as an investable asset.
The noisiness and volatility of its price action has prevented us from being able to draw a meaningful correlation between bitcoin and any major market or economic indicators. I expected Goldman’s report to conclude by summarizing that inflation is not an issue and that even if it was, neither gold nor bitcoin behave as the narratives around them might lead us to believe.
I was wrong. Rather than make a parallel argument to the one that they made against gold – a feat that is eminently possible using the data at hand and would have made for a compelling case – Goldman research launched into a series of non sequiturs about the objectionable traits of and dynamics around bitcoin. They did exactly what I find the smartest people often do when confronted with something as ground-breaking as bitcoin: they abandon all reason.
“They did exactly what I find the smartest people often do when confronted with something as ground-breaking as bitcoin: they abandon all reason.”
The report first poses the question as to whether bitcoin is a currency or an asset class. After only defining the features of a sovereign currency, the report concludes that, due to bitcoin’s failure to meet these criteria, it does not qualify as an asset class. This makes so little sense there is not even a name for this kind of logical fallacy.
“We believe that a security whose appreciation is primarily dependent on whether someone else is willing to pay a higher price for it is not a suitable investment for our clients,” the report goes on to state.
I hate to point out that, really, the fact someone else is willing to pay a higher price for a given instrument is probably the only criteria necessary to know something is a suitable investment. The reasons why someone else will be willing to pay that higher price are what is interesting and are what people generally look to the likes of Goldman Sachs research to explain and expound upon.
It’s not worth detailing every misconception or failed bit of logic in the report. But a few are worth mentioning. Goldman’s argument that cryptocurrencies are not a scarce resource due to the ability to fork into “nearly identical clones” represents a shocking failure of research into the immense technical and cultural differentiations between the three examples that they offer (bitcoin, bitcoin cash and bitcoin sv).
Goldman raises the possibility that cryptocurrency can be used for illicit activity to further discredit it – failing to address that the U.S. dollar, which is lauded for its strength earlier in the report, is the number one asset in the world used for illicit activity.
Finally, the report says the infrastructure around bitcoin and cryptocurrencies is relatively immature. There is much that is misrepresented on the slide illustrating this contention, including the omission of the option to self-custody assets uniquely offered by cryptocurrency. For a company that prides itself on being a “technology firm,” this slide in particular demonstrates an unwillingness to break out of traditional ways of thinking and instead look toward the possibilities opened up by bitcoin.
It would be easy to blame Goldman’s poor arguments against bitcoin on intellectual laziness or a certain strain of stuck-in-the-past thinking. If there is one thing I know from having worked there, however, it is that Goldman Sachs is neither lazy nor slow on the uptake. Rather, I would posit, the weakness of Goldman’s thesis around bitcoin is due primarily to the weakness of the industry around bitcoin in articulating the defining attributes and uses of this paradigm-shifting technology. There are exceptions, to be sure. There are voices, for which I am immensely grateful, that ring out loud and clear in articulating why bitcoin is valuable. But they have an arduous task breaking through the din of misinformation and jargon.
One need only look as far as the industry’s recent failed attempts to sell J.K. Rowling on the value proposition of bitcoin to know that we need to start finding better ways of communicating. If we want the likes of Goldman Sachs to buy into bitcoin, or if we even just want it to be able to make coherent arguments as to why not to buy into bitcoin, then we as an industry ought to look at the coherence of our own arguments first, do more to quiet the noise and work harder to lift up the voices that do make an honest and compelling case.
Coinbase Investor and Fundstrat Analyst Explain Why Goldman Sachs Is Incorrectly Assessing Bitcoin
Here’s why Goldman’s approach to Bitcoin is ‘stale’ and ‘hasn’t evolved much.’
A leaked slide from a client meeting shows Goldman Sachs does not believe Bitcoin is an asset class. Coinbase angel investor Seth Ginns and Fundstrat analyst David Grider explain why Goldman continues to hold this antiquated position.
Ginns and Grider joined Cointelegraph’s weekly Crypto Live Show to bring an investor’s perspective to the usual trader-heavy lineup. They also dive deeply into a broad range of topics including how they began investing in crypto, why they’ve stayed, crypto’s macro impact on the world of finance, private and central bank digital currencies, and institutional involvement in the space. Watch the livestream’s full recording in the video above or skip to 23:05 to go directly to the discussion on Goldman Sachs.
Cointelegraph’s Crypto Markets Live broadcasts every week on Thursday afternoons eastern time. The next show will feature crypto traders Big Cheds and Korean Jew Crypto, so subscribe to the Cointelegraph YouTube channel to make sure you don’t miss when we go live!
Goldman Sachs Leaks Its Position On Bitcoin
Cointelegraph reported that in a May 27 call discussing the state of the U.S. economy, Goldman Sachs appeared to discourage clients from investing in Bitcoin. This was discovered after a Powerpoint slide of Goldman’s presentation was leaked to the public.
On the opposite side of the spectrum stands former presidential hopeful Michael Bloomberg, who already acknowledged cryptocurrency as an asset class. When asked whether they supported Bloomberg or Goldman’s perspective, both Ginns and Grider sided against Goldman.
‘Stale’ Arguments Against Bitcoin
Ginns stated that he thought the question of Bitcoin being an asset class was already settled. He went on to point out another flaw in a different part of Goldman’s presentation, suggesting he was privy to the entire report:
“One of the interesting takedowns of crypto that we’ve seen — we saw it yesterday — was the idea that a lot of crypto is used for illicit purposes, and I found it really funny… So I thought that was a really good indicator of how stale that type of argument is as a takedown on crypto.”
Grider Also Noted How Goldman’s Approach To Crypto Hasn’t Changed Much Over The Past Few Years:
“Goldman — they’re obviously smart folks, very, very smart folks, some of the smartest folks on Wall Street. I think that the narrative that they put out on the call and in the deck — it’s very 2017, 2018…I don’t think that the narrative they’ve kind of put out has evolved much.
Grider goes on to explain why he thinks Goldman’s stance is due in part to political motivations. To hear the full explanation, check out Cointelegraph’s May 28 Crypto Markets Live stream in the video above.
If you enjoyed this latest market update, make sure to hit the Like button, and subscribe to Cointelegraph’s YouTube channel for more weekly crypto content!
Goldman Sachs Set To Jump Back Into Cryptocurrency Trading
Goldman Sachs Group Inc. is restarting a trading desk for cryptocurrencies amid a surge in the value of Bitcoin, a person familiar with the effort said.
The Wall Street bank will begin offering Bitcoin futures among other products by mid-March, according to the person, who asked to to be named because the plans haven’t been announced.
Goldman first offered crypto trading in 2018 when prices were cratering, the person said. The value of Bitcoin has surged in recent weeks, hitting a record high of more than $58,000 on Feb. 21. It has risen about 67% this year.
Reuters reported the news earlier.
40% of Goldman Sachs Clients Reported Exposure To Crypto
A Goldman Sachs client survey on digital assets found that 40% of clients have exposure to cryptocurrencies.
A Goldman Sachs’ client survey on digital assets shows positive sentiment toward the future of cryptocurrency investing.
* The survey showed that 40% of the respondents have exposure to cryptocurrencies and 54% predict the price of bitcoin (BTC, +3.37%) will be between $40,000 and $100,000. News of the survey was first reported by The Block.
* Other key takeaways include 61% of respondents expect their digital assets to increase in the next 12 to 24 months and 32% were most interested in prime brokerage for physical or spot to gain exposure to cryptocurrencies.
* Looking ahead, 22% of respondents predict the price of bitcoin will be over $100,000 in 12 months, while 34% believe regulation and mandate permissions are the greatest hurdles to starting to allocate funds to digital assets.
* On March 1, reports emerged that Goldman Sachs is relaunching its cryptocurrency trading desk after a three-year hiatus and plans to once again support bitcoin futures trading, a source familiar with the matter confirmed to CoinDesk.
Goldman Crypto Chief Flags Institutional Demand Driving Boom
Goldman Sachs Group Inc. is seeing substantial demand for digital assets from institutions as it works to restart its cryptocurrency trading desk.
In a survey of nearly 300 clients by the firm, 40% currently have exposure to crypto, according to Matt McDermott, global head of digital assets for Goldman Sachs Global Markets Division, speaking on a podcast. The situation is different now compared with the 2017 Bitcoin bubble due to “huge” institutional demand across different industry types and from private banking clients, he said.
McDermott confirmed plans reported last week for Goldman to restart its crypto trading desk, which he said will be “quite narrow initially,” with a focus on areas such as CME Group Inc. futures. He said that U.S. banks need to cope with regulations that bar them from trading physical cryptocurrencies.
Cryptocurrency enthusiasts argue that digital tokens and the underlying blockchain technology are gaining acceptance among more mainstream institutions and investors. The derivatives market and new investment products have made digital assets more easily accessible. Some strategists posit that the asset class is a potential diversifier for portfolios, while others are more skeptical and blame speculators for inflating a possible bubble in Bitcoin and other cryptos.
Bitcoin rose as much as 3.4% on Monday in Asia, while Ether gained as much as 5.3% to the highest since Feb. 23.
Blockchain technology offers “a real diverse set of opportunities for the financial industry and something that there’s a huge amount of momentum” for in the market, McDermott said. “We know firsthand just given the various different projects we’re working on. And we see this as a hugely exciting time exploring the potential of that technology.”
As for prices, 76% of those surveyed see Bitcoin ending 2021 between $40,000 and $100,000, McDermott said. However, 22% expect it to end the year over $100,000.
Goldman Sachs Readying Bitcoin Product For Clients
Crypto assets will be available to Goldman Sachs investors at some point in quarter two, comments from an incoming senior executive quoted by CNBC suggest.
Bitcoin (BTC) and some altcoins will soon be available to Goldman Sachs clients, according to a new media report.
Released by CNBC on Wednesday, comments from an interview with Mary Rich, global head of digital assets for the bank’s private wealth management division, confirmed the bank’s plans to offer crypto assets to investors.
Goldman Executive: Crypto Access Coming In “Near Term”
The move will make Goldman the second major lender to open up the world of cryptocurrency to its clients, and it comes weeks after a pioneering move by Morgan Stanley.
″We are working closely with teams across the firm to explore ways to offer thoughtful and appropriate access to the ecosystem for private wealth clients, and that is something we expect to offer in the near-term,” CNBC quoted Rich as saying.
Morgan Stanley’s rollout is due to launch in April, with Goldman’s occurring later in the second quarter. Both banks have the potential to bring large amounts of new capital into the Bitcoin ecosystem via participation in crypto-focused funds.
Continuing, Rich highlighted demand as a driving force behind Goldman’s decision.
“There’s a contingent of clients who are looking to this asset as a hedge against inflation, and the macro backdrop over the past year has certainly played into that,” she added.
“There are also a large contingent of clients who feel like we’re sitting at the dawn of a new Internet in some ways and are looking for ways to participate in this space.”
Like many major banks, Goldman has changed its tune on Bitcoin this year, going from a solid skeptic to embracing the phenomenon — noticeably in contrast with central banks including the United States Federal Reserve.
“Eventually they will have to offer bitcoin services to everyone,” Morgan Creek Digital co-founder Anthony Pompliano commented.
BTC/USD Gets Instant Boost After Crash
Bitcoin price action reacted warmly to the news, passing $58,000 once more after Wednesday produced a flash crash of more than $2,000 in mere minutes.
As Cointelegraph reported, analysts remain less concerned about the lack of momentum, pointing to solid fundamentals and the need to shake out overleveraged positions before grinding toward all-time highs.
$68,000 and $73,000 are points of interest for a potential breakout.
Rich Crypto Investors Going Alone Gets Goldman Off Sidelines
After watching Bitcoin’s stratospheric rise from the sidelines, game developer Adam Dart wanted a piece of the action.
The 29-year-old Scot who lives in Singapore reached out to a handful of local and international banks to ask about opening investment accounts to trade crypto with funds from his family’s wealth office. To his surprise, he was told that while bankers could offer their personal opinions on digital currencies, they couldn’t provide investment services.
“We had to eventually deploy the family office investment via Gemini, a U.S.-based digital asset exchange that operates in Singapore,” said Dart, who helps his parents run the firm that mainly invests in stocks, currencies and private equity. “It’s too much risk for banks to put Bitcoin in the portfolio, that’s generally the reason.”
Dart, whose family owns a semiconductor business, is just one of millions of wealthy investors going it alone as banks largely shy away from cryptocurrencies. Thousands of miles away, Christian Armbruester, founder of the London-based Blu Family Office, is exploring setting up a dedicated fund to trade the assets at a potential cost of more than $100,000 after European banks turned him away.
“They said no way — they didn’t want to custody this stuff,” said the one-time investment banker who oversees about $700 million for himself, his family and other wealthy investors. “This is where the rubber meets the road for cryptos. Everybody can get excited, but the implementation is very difficult.”
After dismissing digital currencies for years, some — but not all — Wall Street giants are warming to the idea. Goldman Sachs Group Inc. said this week it’s close to offering investment vehicles for Bitcoin and other digital assets to private wealth clients.
Morgan Stanley plans to give rich clients access to three funds that will enable ownership of crypto and Bank of New York Mellon Corp. is developing a platform for traditional and digital assets. Still, none of the biggest U.S. banks currently provide direct access to Bitcoin and the likes.
In Europe, Julius Baer Group Ltd. has started offering trading and custodian services of major cryptocurrencies within Switzerland, and Swiss private bank Bordier & Cie began to trade the assets via a third-party platform.
In Singapore, DBS Group Holdings Ltd. recently started a digital exchange that allows qualified investors of its private bank to invest in major digital assets while providing custodian services for them.
While Bitcoin is now more than 11 years old, there are very few things it can actually buy, and many lenders remain wary of the volatility risk associated with the virtual currency. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon famously called Bitcoin a “fraud” in 2017 and threatened to fire any employee caught trading it — comments he later said he regretted.
UBS Group AG, one of the world’s largest wealth managers, in January warned new crypto investors that they could lose all their money.
“Lenders also have concerns over compliance and risk management, especially around money laundering and terrorist financing risks,” said Nizam Ismail, founder of Singapore-based Ethikom Consultancy, which advises firms on compliance.
“Still, regulators worldwide are revamping their framework to regulate cryptocurrency intermediaries as conventional financial institutions.”
Once seen as the province of nerds and computer geeks, Bitcoin has been gaining wider acceptance and many investors are speculating it will shake up the financial world. The best-known cryptocurrency has reached a series of records in 2021 — just three years after its price collapsed — after endorsements from the likes of Paul Tudor Jones, Stan Druckenmiller and Elon Musk.
The cost of a single Bitcoin has doubled this year to about $59,000 and the price has surged more than 500% since the start of 2020, according to Bloomberg data.
Some of the wealthiest and most sophisticated investors have become long-term backers after striking out on their own.
Mexican billionaire Ricardo Salinas Pliego revealed in November that he’s put a chunk of his liquid funds in the world’s biggest cryptocurrency and first invested in it five years ago through Grayscale Investments, when the price of one Bitcoin was about $800.
Now, Bitcoin’s rally over the past few months is intriguing wealthy investors in a new way.
“We have seen a surge in demand for investment professionals — particularly those focused on private equity and digital assets,” said Tayyab Mohamed, co-founder of Agreus Group, a London-based recruitment and resourcing company for family offices. In the past year, one single-family office based in the English capital completely shifted its investment portfolio of about $2.8 billion away from real estate to new asset classes including cryptocurrencies, he said.
The boom has also vaulted those helping trade the digital assets into the world’s ultra-rich. Coinbase Global Inc. co-founder Brian Armstrong is now a billionaire, though estimates of his fortune vary, underscoring the wild price swings of cryptocurrencies.
Set up in 2012, Coinbase is the biggest U.S. exchange for the assets and is expected to go public this month, marking another milestone for the transformation of crypto as a mainstream asset class.
“Trading and speculation were the first major use cases to take off in cryptocurrency, just like people rushed to buy domain names in the early days of the internet,” Armstrong, 38, wrote in a letter included in Coinbase’s registration filings with the U.S. Securities and Exchange Commission. “But we’re now seeing cryptocurrency evolve into something much more important.”
Yet for crypto newcomers like Dart, investing hasn’t been easy. Although he’s attended many next-gen courses that teach financial markets and trading via the family’s private banks, not much was explained about dealing with digital assets, he said.
Dart, who was drawn to crypto after his sister successfully invested in Bitcoin in 2014, has now set aside a small percentage of his family’s portfolio for it. He’s hoping that private banks will catch on to the craze and allow clients to include crypto in their accounts, instead of having to use external exchanges.
“It would be safer and much less of a hassle, while allowing us to achieve a more holistic view of our total asset allocation within our portfolios,” he said.
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