Exchange Tokens, PoS Coins Outperform Broader Crypto Market: Goldman Sachs

Exchange tokens and proof-of-stake (PoS) coins are outperforming the overall movements of the cryptocurrency market as a whole, according to Goldman Sachs Group Inc. GS.

What Happened: "Monitoring crypto’s market segments may help determine which network features investors are rewarding, as well as the prospect for practical applications of the technologies," Goldman Sachs’ co-head of foreign exchange strategy Zach Pandl explained in a recent paper, according to a Thursday Coindesk report. 

In doing this kind of research, the bank said it found performance discrepancies between various categories of digital assets.

Namely, the research found that PoS coins performed better than proof-of-work (PoW) coins since the end of 2019.

This may be caused for instance by PoS being a newer technology than PoW, which means that networks using it are newer and with a smaller market cap. This lower market cap could cause higher volatility, which could lead the coins to see more gains during a bull market.

At the same time, PoW's energy-intensive mining is the reason why Tesla dropped Bitcoin BTC/USD, so some investors may be selectively investing in PoS projects over environmental concerns, causing them to outperform the broader market.

Another finding was that privacy-oriented coins such as Monero XMR/USD underperformed the overall movements of the cryptocurrency market. This is presumably due to threats of increasing regulatory pressure, which resulted in numerous exchanges dropping support altogether.