The head of commodity research at Goldman Sachs said that Bitcoin (BTC) is certaintly attaining more maturity as an asset class. However, he adds that more institutional money needs to flow into BTC to gain price stability.
After the recent Bitcoin bull run, Wall Street banking giant Goldman Sachs has agreed that BTC is on the path to maturity. Goldman Sachs head of commodity research Jeff Curie spoke to CNBC on BTC during a recent interview with the media house.
However, despite signs of financial maturity in Bitcoin, the institutional participation is still very little, adds Currie. Over the last few months, institutions have collectively poured billions of dollars in Bitcoin (BTC). However, a majority of the big players have parked only 1-2% of their reserve cash in Bitcoin (BTC). Roughly $600 billion of institutional money has entered into Bitcoin (BTC) so far. While institutional interest in Bitcoin has certainly grown, it’s still in the preliminary stages.
Currie further added that more money from the financial space should flow into Bitcoin for it to stabilize further. After approaching $42,000 levels earlier on Sunday, BTC price collapsed nearly 20% on Monday moving all the way close to $30,000 and almost wiping out all of its gains in 2021, so far. This sharp correction came after BTC price almost doubled in a month’s time. Speaking to CNBC, Currie said:
“I think the market is beginning to become more mature. I think in any nascent market you get that volatility and those risks that are associated with it. The key to creating some type of stability in the market is to see an increase in the participation of institutional investors and right now they’re small.”
Bitcoin – The Gold 2.0?
There’s a lot of buzzes in the market about Bitcoin (BTC) being the next Gold. Bitcoin (BTC) is slowly cementing its position as a store-of-value over the last few years. Wall Street banking giants, however, remain divided on this opinion that Bitcoin can become the next Gold.
Banking giant JPMorgan last month said that money has been moving out of Gold ETFs and going into Bitcoin. Thus, JPMorgan has also given a long-term price target of $146,000 for Bitcoin. However, Goldman Sachs believes that Gold has no existential threat from Gold. In a report accessed by Bloomberg last month, the banking giant said:
“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. While there is some substitution occurring, we do not see Bitcoin’s rising popularity as an existential threat to gold’s status as the currency of last resort. We do not see evidence that Bitcoin’s rally is cannibalizing gold’s bull market and believe the two can coexist.”
Goldman Sachs is very much bullish on Gold and said that it can replace the USD as the world’s reserve currency by 2022.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.