Since the big bank Goldman Sachs stopped denigrating Bitcoin (BTC) and cryptos, it has completely flipped its coat, and is now studying them closely. Notably via surveys of its wealthy clients, such as familly offices that have proven to be very fond of cryptocurrencies. One of the executives of the multinational bank even goes so far as to outclass Bitcoin compared to gold.
After “money, gold of the poor”, here comes “gold, crypto of the poor”?
To think that Goldman Sachs, even until May 2020, did not even consider Bitcoin and crypto-currencies as a valid asset class! But the speeches and the mentalities have changed well within the large sprawling bank. At least that’s what is clear from the latest interview conducted by Bloomberg with Damian Courvalin, head of energy research at Goldman Sachs.
While the discussion was focused on the good configuration of gold prices, which could resume an upward trend, the topic of Bitcoin and crypto-assets was brought up. And the least we can say is that gold might have something to worry about.
Indeed, Courvalin acknowledges that cryptos have been able to capture, at least in part, the money that was traditionally invested in gold as a hedge against fiat currency inflation:
“I think [this use of cryptos against inflation] is actually starting. (…) it’s even a fact, we’ve seen such substitutions recently.”
Similarly, the Goldman Sachs executive paraphrased the phrase “silver (metal), the poor man’s gold,” to say that gold may be becoming “the poor man’s crypto.”
Silver is more readily available to the less affluent (because gold is more expensive), but the precious metal is still an acceptable alternative to gold as a hedge against inflation. So Damian Courvalin now makes the observation that gold would take on the status of an inferior, but satisfactory and cheap alternative to Bitcoin.
Gold and Bitcoin don’t need to “cannibalize” each other
However, the Goldman Sachs executive reminds us that cryptos and gold are not necessarily antagonistic. Courvalin believes that, in the face of the dangerous peril of hyperinflation posed to the world by state paper currencies, the slice of the pie would be quite large for all these safe haven type assets:
“We’ve argued historically that cryptos and gold don’t have to cannibalize each other (…) At this point, there may be enough wealth to allocate to both, especially, I think, as this inflation signal starts to get more pressing.”
In fact, the big bank executive takes the example of China, which has violently banned Bitcoin and cryptocurrencies from its soil. The demand for gold has thus been very strong there in recent months, since the purchase of BTC and other cryptos has become more complicated.
In any case, the multinational bank is now very optimistic – or even outright bullish? – about the future of cryptos. So much so that Goldman Sachs even sees Ethereum (ETH) reaching $8,000 by the end of this year 2021.
