Goldman: Bitcoin may become a new alternative to gold
Bitcoin has not yet managed to fully recover. Over the past month shares of the Bitcoin Investment Trust (GBTC) has risen more than 30%, however, the net asset value of the Fund decreased by approximately 7%, according to Morningstar, according to Dow Jones.
This decline is partly due to tighter regulation in China and South Korea. So, last year the Chinese government banned initial placement of coins (ICO) and limited trading volume in the OTC market, which could slow down trading activity and potentially increasing credit risk. It is reported that authorities ordered to gradually phase out mining bitcoins.
In a Wednesday report, analysts at Goldman Sachs have analyzed the features of bitcoin as money. Analyst Zach Pendle suggests that bitcoin is able to make transactions more simple, but only in theory. He admits that the demand for crypto-currencies can be associated with “dissatisfaction” with existing regulated financial systems. According to Google Trends over the past five years, the search query “bitcoin” is the most frequently reported in Nigeria, South Africa and Ghana – all of these are countries with unstable national currency and/or restrictions on the use of foreign currency.
In addition, Pendle sees signs of “a classic speculative bubble” and believes that in the long term, bitcoin may not be the best investment instrument. “You must understand that the money from cryptocurrency should be low expected returns in the long term, despite the high current yield,” he said. If we assume that the profitability of cryptocurrency is equal to or lower than the growth of real growth of world output, digital currency will bring low or no income, like hedging instruments, such as gold or other similar metals, said Pendle.
The analyst indicates that there has been a contradiction. How can bitcoin or other cryptocurrencies at the same time generate high income, which has recently been observed by investors and considered a reliable asset? The answer is no.