Goldman Sachs Investor Presentation On Bitcoin Released, Gets Crypto Community Angry

Goldman Sachs Group Inc. on Wednesday GS published a presentation titled "U.S. Economic Outlook & Implications of Current Policies for Inflation, Gold and Bitcoin" ahead of an investor call.

Goldman Says BTC Not An ‘Asset Class'

The investment bank's views on Bitcoin (BTC) particularly grabbed attention, as it once again instigated the tussle between established financial giants and the cryptocurrency community, CoinDesk reported.

"We believe that a security whose appreciation is primarily dependent on whether someone else is willing to pay a higher price for it is not a suitable investment for our clients," Goldman said in the investor presentation.

The bank said hedge funds may find the digital assets appealing because of "their high volatility," but "that allure does not constitute a viable investment rationale." Goldman further went on to say that cryptocurrencies, including Bitcoin, are "not an asset class."

Cryptocurrencies don't generate "cash flows like bonds," or any "earnings through exposure to global economic growth," according to the bank. The virtual assets aren't even useful for diversification of assets, or as security against volatility, it noted.

Goldman Based Reports On ‘Mainstream Headlines,' Crypto Experts Argue

Experts in the cryptocurrency field argued that Goldman's report showed a lack of analysis and repeated mainstream bias against the nascent financial industry.

"The criticisms were very cookie cutter, the type you'd expect if someone just read mainstream headlines," Messari analyst Ryan Watkins told CoinDesk.

"It's like they didn't fully diligence the asset." Tom Masojada, co-founder at OVEX Digital Asset Exchange, noted that other asset classes recommended by Goldman for its investors, including art and gold, also depended on someone willing to pay a higher price for the asset at a later date.

The Winklevoss twins, major Bitcoin proponents, also criticized Goldman's views on the apex cryptocurrency on Twitter.

Goldman Sachs: In 2019, $2.8 billion in Bitcoin was sent to currency exchanges from criminal entities.

Fun Fact: Goldman Sachs facilitated $6 billion in money laundering via 1MDB scandal between 2012-13.

Double standard much?

— Tyler Winklevoss (@tylerwinklevoss) May 27, 2020

Bitcoin does "not generate cash flow like bonds." Because it's not a bond. And the sky is blue.

— Cameron Winklevoss (@winklevoss) May 27, 2020

Goldman isn't the only major financial institution that has remained critical of cryptocurrencies. Others, including JPMorgan Chase & Co. JPM Chief Executive Officer Jamie Dimon and Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) CEO Warren Buffett, have also expressed their disapproval.

Price Action

Goldman Sachs shares closed nearly 7% higher at $209.66 on Wednesday. Bitcoin traded 3.3% higher at $9,160.58 at press time on Thursday.