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Goldman Sachs believes Bitcoin & Gold can co-exist

  • Goldman Sachs sends note to investors assuring that Bitcoin is not capturing demand from Gold.
  • Institutional firms have invested record amounts of capital into Bitcoin this year amid parabolic growth in price.
  • Bitcoin is up 218% YTD, compared to Gold at 24% YTD.

Goldman Sachs Reassure Investors 

In a note to investors this morning, global investment bank Goldman Sachs dampened fears that cryptocurrency colossus Bitcoin could nullify the demand for seasoned store-of-value asset Gold, reinforcing the rhetoric that both assets can co-exist in the market.

First reported by Bloomberg, Sachs wrote: “We do not see evidence that Bitcoin’s rally is cannibalizing gold’s bull market and believe the two can coexist”

 

Safe-Haven Competition

Bitcoin has been long dubbed ‘digital gold’ in an attempt to simplify its utility as an asset of value for cryptocurrency illiterates and traditional financial entities. However, its unique features of decentralisation, immutability and scalability far surpass the limitations of its predecessor.

As a result, many institutional firms including Grayscale, Tudor Investment, MassMutual and MicroStrategy have made substantial investments, additionally hedging their portfolios against the economic downturn of the global pandemic.

Grayscale’s ‘Drop Gold’ television advert encouraging investors to switch Gold for Bitcoin caused controversy amongst traditional investors when published in May 2019. At the time, Bitcoin was valued at $5375.

 

Price Comparisons

Bitcoin (BTC) soared to historic all-time-highs this week above $20,000, registering a peak of $23,777 according to data from cryptocurrency exchange Bitstamp. This put the asset up 218% in year to date (YTD) analysis.

In contrast, Gold has recorded a 24% YTD growth, but is down 9.2% since record highs in early August this year.

In the note, Sachs assured investors:

“Gold’s recent underperformance versus real rates and the dollar has left some investors concerned that Bitcoin is replacing gold as the inflation hedge of choice… “we do not see Bitcoin’s rising popularity as an existential threat to gold’s status as the currency of last resort.”

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