Goldman Sachs Warns on the Risks of Cryptocurrencies
Goldman Sachs is definitely one of the banks that does not support cryptocurrencies. The bank confirmed once again that it is not a cryptocurrency fan by issuing a warning to clients about investing on the cryptocurrency market.
Goldman Sachs has reportedly told its clients that the cryptocurrency "mania" had gone "beyond bubble levels." Allegedly, the financials giant has sent a 108-page note to some of its richest clients warning them about the risks of investing in cryptocurrencies.
It has been revealed that the note was issued by the Private Wealth Management division of the company and was sent only to clients who have more than $10 million in investable assets.
Goldman Sachs does not believe cryptocurrencies will keep their value
The banks' note indicated that:
“While we do not know if bitcoin or any other cryptocurrency will double or triple from prevailing prices, we do not believe that these cryptocurrencies will retain their value in the long run in their current incarnation.”
The note also indicated that while digital currency and blockchain technology might be valuable, bitcoin fails to provide the desired benefits to its users. The bank explained that:
“We think the concept of a digital currency that leverages blockchain technology is viable given the benefits it could provide: ease of execution globally, lower transaction costs, reduction of corruption since all transactions could be traced, safety of ownership, and so on. But bitcoin does not provide any of these key advantages. Quite the contrary.”
Goldman Sachs also made the link between the cryptocurrency market and the already known tulip bubble that happened in the Netherlands. This is definitely not the first time when such a comparison is being made. However, what Goldman Sachs seemed to have wanted to share is that the huge growth in the price of bitcoin has made the cryptocurrency look like a bubble.
Goldman Sachs also issued an interesting hypothesis. The giant bank claimed that a cryptocurrency market crash will not have such a huge effect on the global economy or on financial markets.
