The Ledger: Are cryptocurrencies an ‘investment’?

A report by Goldman Sachs has once again put crypto investors in a difficult position. While the investment bank has shown support for both ethereum and bitcoin in recent weeks, it certainly knows how to bring controversy to the discussion.

The report, titled Digital Assets: Beauty Is Not In The Eye Of The Beholder, argues against some popular narratives in the investment space pertaining to bitcoin and cryptocurrencies in general. Analysts dismiss the idea that bitcoin is an “investable currency” and they provide details as to why this is the case.

For starters, the analysts took a look at the claim that bitcoin can be used as a “hedge” against inflation. The argument basically runs that FIAT currency is infinite whereas bitcoin's supply is limited.

Next, the volatility of the currencies is “diametrically opposed” to what mainstream financiers consider to be “wise”. The rapid appreciation of cryptocurrencies, which in the case of dogecoin reached 12,000% valuation within a year, has been another red flag.

In conclusion, Goldman Sachs explained that cryptocurrencies are not even a good idea as part of a “diversified portfolio”.

Media frenzy

There has been much talk about cryptocurrencies and their potential in media. Goldman Sachs believes it is one of the reasons to crypto can’t be a viable asset class.

Recently, we have seen Elon Musk toy around with the value of cryptocurrencies. While some have argued that Musk would have an impact on anything, the way the crypto market has been blowing hot and cold after a tweet by Tesla's chief executive seems altogether different.

Musk said Tesla would divest its $1.5bn holdings, or at least suggested it, but then endorsed bitcoin again earlier this week arguing that it has become greener.

The Twitter “manipulations” have rubbed some people the wrong way while followers have cheered at the opportunity.

Bitcoin whales have also been stocking up on bitcoin as they were probably expecting the price to go up once again. Regardless of what we think about Musk's behavior, the rapid fluctuations only add to Goldman Sachs' view of the sector as “non-investable”.

The report does acknowledge one situation when crypto investment is viable – speculation. If you treat crypto as purely speculative, then all is well, the report argues, but speculation is closer to gambling than making informed decisions.

The bottom line is that one of the biggest investment banks has backtracked its support for cryptocurrencies. Will this warning be enough to curtail the effects of the next elated tweet by a powerful tech visionary?

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Written by Barney

Co-founder

Barney is co-founder of CryptoGamblingNews.com. When not at work he can usually be found behind a Nikon. He's won numerous international competitions for his photography and volunteers as a content creator for aid organisations in Africa.

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