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We analyze Goldman Sachs’ “miserable arguments” regarding Bitcoin and the reactions of the crypto community

June 1, 2020

A leaked slide shows that Goldman Sachs, the fifth largest bank in the United States, doesn’t believe Bitcoin is an asset class. At least one Goldman team does not currently consider this a recommendable benefit for its customers. They presented their arguments. And they made their recommendations in a conference call on the economic outlook for the United States. The “contempt” didn’t go well with the crypto ball. It looks like we’re not very good at rejections. The Carnival Queen said no. And we couldn’t do better than picking up the microphone and attacking them with disqualifications.

You have put forward your arguments. And we cannot say that they are completely wrong. Bitcoin does not generate sources of income such as stocks or bondss. True. Bitcoin is a very volatile security. It is an essentially speculative asset, the price of which mainly depends on what someone else is willing to pay for it. And its correlation with the other markets is not very clear. True. Goldman Sachs’ stance is certainly out of date, but it’s not the end of the world. You have the right to make comments. However, the reaction of the crypto community was as if an earthmoving machine was selected as the NASA director. Total hysteria.

Read on: The opinions of Goldman Sachs and Bloomberg contradict Bitcoin

We analyze Goldman Sachs’ “miserable arguments” regarding Bitcoin and the reactions of the crypto community
We analyze Goldman Sachs’ “miserable arguments” regarding Bitcoin and the reactions of the crypto community

One of the most insulted by the Carnival Queen’s contempt and her big “no” was one of the Winklevoss twins who brought her malice and resentment to crypto-Twitter. “”That you smoked?“He said to the girl with his heart in pieces. But Cameron was not the only one who took this path. Here many joined the outrage and threw their stones. It seems that the more extreme we are, the purer. And that we have to face all those who contradict us cruelly. Bitcoin is the new gold coin on the block and those who don’t want it are doomed to fail. “Really?”

There are several ways to respond to an easy one. We can act as a bad loser. I mean, we can blame everyone (except us) and host the big show. Or we can take the Lord’s stance. Accept rejection with respect and dignity. Be careful, whoever rejects us can be wrong. However, there is no need to host a show. The best way is to demonstrate mistakes with facts. You have to let Bitcoin speak for itself. The asset is good and will face the challenges of the time. Where will bitcoin be in 10 years? In 20 years? Let Bitcoin speak for us.

Our hypersensitivity to criticism and rejection is a clear sign of immaturity. Bitcoin is the new kid in school. It is very innovative and we cannot expect immediate popularity. Acceptance is a long and slow process. Some institutions don’t recommend Bitcoin, but others do. Even Goldman Sachs does not have a homogeneous position on this matter in all of its departments. Banks have many teams and not all of them treat the same criteria. We know that Goldman has been involved in blockchain projects in the past. And the same team that Bitcoin doesn’t recommend today can do so in the future. Wall Street is a jungle of constantly changing recommendations. Today is a triple A and tomorrow it is a triple C. And vice versa. It is not the end of the world.

We also have to recognize that there are different investors with different philosophies. Subjectivity also applies in the investment world. In other words, tastes and moods are valid. After all, people invest in what they want. There are many in the investment world who, for example, do not like to invest in metals or raw materials. Others do not invest in new technologies or relatively new projects. There is everything on Wall Street. And it’s okay.

Read on: “What did you smoke?” Winklevoss tells Goldman Sachs in a strong Bitcoin discussion

For example, many do not like to invest in gold because gold is essentially a speculative asset. This means that no sources of income such as stocks or bonds are generated. and its price mainly depends on what someone is willing to pay for it. Well, we can’t deny that a gold bar is a gold bar today in 100 years. However, a farm is now a farm and in 100 years it will be a farm plus all the income that it has generated in that period. There are investors who prefer to invest in productive assets that generate residual income. And there are others who have no problem with assets, the price of which only increases due to increasing demand. There is no reason to insult yourself. People have their preferences and it’s fine.

Of course, it’s difficult to categorize Bitcoin. Is it an action? Is it a bonus? Is it a coin? Is it a commodity? Coins have no use value, only exchange value. So Bitcoin could be a currency. However, being a currency is very unusual. First, it is a private initiative. Most of the coins are government projects. On the other hand, it is a decentralized private initiative. That is, it is not the currency of a bank or a company. In addition, it has a firm offering in a young and growing market. That brings you a very unusual volatility for a currency. This is more common in a collectible. Works of art, collectibles, antiques and diamonds have these characteristics.

Because of the difficulty in classifying Bitcoin, a lot of more ambiguous terms have been chosen in many regulations: commodity. Goods or goods. It’s something like saying: everything fungible, with the demand of an established market. There are many things in this category: including oil, gold, silver, coffee, orange juice and cocoa. Here we fall into the same dilemma as above. If Bitcoin is a commodity, it is a very untypical commodity. Because the goods usually have utility value. There is an industry that uses them as raw materials. Your demand comes from a need. Their physical or aesthetic benefit gives them their value. Gold, for example, is widely used in jewelry and manufacturing. Oil is energy. And food fulfills a basic human need. Bitcoin has only monetary value.

Bitcoin is a very special digital object. It is not a currency like the dollar or the euro, but it is also not a commodity like oil or coffee. In this discussion about Bitcoin and Goldman SachsI’m afraid I’ll take an intermediate position. I wouldn’t go so far as to say that Bitcoin is not an asset class. However, I think Bitcoin is a new asset class in a separate category. In this sense, Goldman Sachs took a very old-fashioned stance by simply restricting itself to traditional definitions.

I also think your recommendation not to invest in Bitcoin is extremely conservative. While Bitcoin is a risky asset, it’s a bit of an exaggeration to completely exclude it. Many institutes manage the 1% portfolio option. The funding of an absolute 0% seems exaggerated. And I wouldn’t be surprised if they changed their minds in the future.

Read on: Coinbase investor and Fundstrat analyst explain why Goldman Sachs mispriced Bitcoin

However, I also think that many in the crypto community have ridiculously overreacted. He took the totalitarian stance of everything or nothing like the tantrums of a spoiled child. Something like when Goldman refutes me, they’re pathetic. If we buy a Bitcoin today, we will still have a Bitcoin in 10 years. Is it wrong Does the price of our “digital gold” not depend on demand? OK. Goldman has not recommended Bitcoin. It is not an evil to die. Get over it! There are more girls in this dance. If you are rejected, it swallows fat and life goes on. There would be others who appreciate us.

Until recently, the Winklevoss twins celebrated their new alliance with JPMorgan with new drums and cymbals. You yourself ran the “Crypto Needs Rules” campaign. We all know they want to attract the banks and capital of the big Wall Street institutions.

But now, due to an unfavorable conference call, they started the anti-bank and anti-system narrative that they don’t actually practice. You’re welcome! Another dog with that bone. Anyway, we’ll see you with the Goldman Sachs people in the future. If the Carnival Queen winks at them, they will no longer be disqualified. The war they started on Twitter was just a show of a wounded heart.

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