Key Takeaways:
- Goldman strategists warn that widely adopting crypto won’t result in higher prices.
- The strategists also said that these assets are not protected against “macroeconomic forces” and “central bank monetary tightening.”
Wall Street giant Goldman Sachs has warned that mass adoption of crypto won’t automatically boost its prices. He also says that it can even destroy the statement that bitcoin, ethereum, and other coins enhance a portfolio.
On Thursday, Goldman strategists Zach Pandl and Isabella Rosenberg said that tokens like Bitcoin had gained broader mainstream appeal in recent years. Due to this, their relationship with other macro assets has expanded and has made crypto the focal point of the recent turns across asset classes.
They have also said that apparently, the cost of Bitcoin seems positively related to intermediaries for consumer-price risk such as breakeven inflation and crude oil costs, as well as “frontier” technology stocks. However, the cost is negatively related to actual interest rates and the U.S. dollar.
The bitcoin and cryptocurrency prices have finally stabilised this week after a sharp fall, and the crypto market lost over $1 trillion. However, the failing of ethereum, BNB, Solana, Cardano, and XRP may point to another crypto winter.
The strategists have also said that the recent selloff of crypto highlights that “mainstream adoption can be a double-edged sword.” “While it can raise valuations, it will also likely raise correlations with other financial market variables, reducing the diversification benefit of holding the asset class.”
“Over time, further development of blockchain technology, including applications in the metaverse, may provide a secular tailwind to valuations for certain digital assets,” mentioned the strategists. However, they also point that “But these assets will not be immune to macroeconomic forces, including central bank monetary tightening.”
