Goldman Sachs's consumer and wealth management division has concluded that cryptocurrencies are "not a viable investment" for diversified portfolios in a new report for its clients.
- The report obtained by CoinDesk Monday cited a couple of reasons for pessimism, including the high energy consumption of mining and the possibility of technological advances such as quantum computing making current blockchain technology obsolete and the risk of greater regulatory oversight hampering crypto's status as a speculative asset.
- The scarcity of regulated exchanges has also contributed to a paucity of available data on crypto assets. The data is "improving," though still "poor," the report stated.
- "After analyzing various valuation methodologies and applying our multi-factor strategic asset allocation model, we have concluded that cryptocurrencies are not a viable investment for our clients’ diversified portfolios."
- The report, however, does conclude that components of the crypto ecosystem, including blockchain technology, are likely to contribute to long-term economic growth.
The assessment is at apparent odds with Goldman Sachs' disclosure in March that it would be offering crypto to its private wealth management clients.
It's also worth noting that Goldman's consumer and investment management division argued in May 2020 that cryptocurrencies were "not an asset class." According to that presentation, bitcoin was "not a suitable investment for our clients," merely a beneficiary of a "mania" worse than the infamous run on Dutch tulips in the 1600s.
At the time, bitcoin was trading at about $9,200. The price has since increased fourfold, to about $40,200 as of press time.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.