Goldman Sachs Doubts Bitcoin As Store Of Value Citing Environmental Problems And “Lack Of Real Use” – Markets And Prices Bitcoin Planet
Global investment bank Goldman Sachs is wondering if bitcoin can be a long-term store of value and digital gold. Analysts at the company cited various issues related to the cryptocurrency, such as environmental issues, “lack of actual use” and competition from other cryptocurrencies.
Goldman Sachs views Bitcoin issues as a long-term store of value
Goldman Sachs released a memo on Wednesday describing some issues with bitcoin as digital gold. Analysts at the company, led by its senior commodities strategist Jeffrey Currie, have expressed concern over whether the cryptocurrency could become a long-term store of value.
Analysts explained, âWhile bitcoin enjoys greater liquidity, it suffers from a lack of actual use and a low environmental, social and governance ESG score, due to its high energy consumption. . They also cited competition from other cryptocurrencies as a factor preventing bitcoin from becoming digital gold, explaining:
Traditional long-term stores of value such as gold, art, diamonds, wine, and collectibles all have value and use beyond being stores of value.
Goldman Sachs explained that âactual usage is important because it mitigates price volatility, as actual demand adjusts to absorb fluctuations in investment demand. It also means that the asset is unlikely to reach zero.
Analysts have claimed that bitcoin’s lack of real uses and its environmental issues make it “vulnerable to the loss of demand for store of value to another, better-designed cryptocurrency.” They further claim, âBitcoin has given way to other cryptocurrencies such as ether and altcoins. In our opinion, this underscores the fact that the competition among cryptocurrencies for dominant long-term store of value status is still active and adds an additional source of risk to holding bitcoin. “
Regarding the environmental impact of bitcoin, analysts wrote that there were concerns about the electricity consumption of the cryptocurrency used in the mining process, citing research from the University of Cambridge showing that it consumes more energy each year than Argentina. However, many argue that bitcoin mining is increasingly using renewable energy.
However, a growing number of people believe that bitcoin is a great store of value that can be used as a hedge against inflation, including pro-bitcoin US Senator Cynthia Lummis. Some even say that bitcoin will replace gold as the store of value of choice. However, according to Goldman Sachs analysts, “we believe it is too early for bitcoin to compete with gold for safe haven demand and the two can coexist.”
Meanwhile, Goldman Sachs has brought back its bitcoin trading desk and plans to launch a âfull lineâ of crypto investment products. In March, the company reported seeing huge institutional demand for BTC. CEO David Solomon said earlier this month that he expects a “big change” to come in cryptocurrency regulation.
What do you think of Goldman Sachs’ comments on bitcoin? Let us know in the comments section below.
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