Goldman Sachs warns the clients about the crypto bubble

Goldman Sachs published a 108-page long document with speculation about the unfortunate future of the cryptocurrencies
23 January 2018   1062

The document titled “(Un)Steady as She Goes” was sent out by the famous American financial corp to warn the investors about the grim future awaiting cryptocurrencies. Reportedly, it was sent out to the wealthiest clients of The Firm to round up the events of the last 12 month surrounding Bitcoin and other prominent coins.

The paper was comprised by Sharmin Mossavar-Rahmani and Brett Nelson, both of whom are senior officials at the Investment Strategy Group Goldman Sachs. While the fearmongering and naysaying are ripe throughout the document, there are several good points to consider. While they admit, that technology behind the crytpocurrencies, namely blockchain, is valuable and useful for the future development in different spheres, they go to say that the craze around the whole topic of crypto is overrated and will blow over like any other flight of fancy in the past has done.

As usual with crypto fearmongering, there is a comparison with Dutch “Tulip mania” which we've already seen done a thousand times. There is also a point made about “Stock bubbles” for companies who announced some type of affiliation with blockchain and cryptocurrencies. The Long Blockhain (formerly a Long Island Ice Tea company) has been on the news because of that and has seen their share price rise rapidly. The same goes for the former sport bra company now proudly presented as the Crypto Company. There is no guarantee, that such kind of buff will survive the test of time, the authors point out.

And their main gripe is, actually, not the crypto as a whole, but Bitcoin in particular, because while the advantages of cryptocurrency are apparent, such as transparency and traceability, ease of execution globally, safety of ownership. But Bitcoin doesn't provide anything from this list, on the contrary, the rising TX fees, long settlements, and hackers' recent interest all really contribute to the scepticism, expressed by Mossavar-Rahmani and Nelson.

Bitcoin May Pass Gold Market Cap, - Novogratz

Mike Novogratz continues to be Bitcoin and cryptocurrency optimist 
25 March 2019   106

The founder of Galaxy Digital, Mike Novogratz, expressed the opinion that over the next 20 years, Bitcoin’s capitalization would “easily” surpass the gold market, currently estimated at $ 7.5 trillion. It is reported by The Daily HODL.

In a conversation with the founder of Morgan Creek Digital, Anthony Pompiano, Novogratz stressed that the inflow of institutional money to the cryptocurrency market is only a matter of time, and major players like Goldman Sachs and the Intercontinental Exchange (ICE) are already mastering a new industry.

I know Goldman for instance is gearing up around securities tokens. They’re not doing anything yet, but they’re getting really ready and looking at all the questions on – where would you store them? Do you have to build your own custody, or can you use someone else’s custody? How to get them to work.
 

Mike Novogratz

Founder, Galaxy Digital

According to him, the growth potential of Bitcoin is strong and therefore it is advisable for investors to include the first cryptocurrency in their portfolios:

I think the macro case for [Bitcoin] is pretty strong. And so, if you can put a couple percent of your portfolio in, there’s a decent chance it catches wind. Fidelity is just getting set up. Bakkt continues to get delayed a little bit, but it’s not going to be delayed forever. They’re going to be in the game. And there’s lots of other players coming.
 

Mike Novogratz

Founder, Galaxy Digital

According to him, the volume of the gold market is $ 7.5-8 trillion and in order to outperform this market, the first cryptocurrency needs to grow in price at least 100 times.

Gold’s got an $8 trillion market cap, or a $7.5 trillion market cap. And so, we’re 100x off on that. We’re not going to get there in Bitcoin in the next year or two. But over a 20-year period, could that happen? Easily. Easily. And that’s giving zero optionality to all the other stuff. And so I think it seems like a pretty smart portfolio bet.
 

Mike Novogratz

Founder, Galaxy Digital

The founder of Galaxy Digital also touched on the topic of bitcoin futures.

The reality is, the CME kicked their butts. And these guys have limited resources on what they’re going to spend their focus, and they decided to spend it elsewhere. Finding leverage in Bitcoin is going to get easier as the architecture in the space gets better. You’re already seeing the lending market around Bitcoin went from 10% to like 3%. So once you can borrow you can short. And so now it’s not so hard to short Bitcoin. It used to be almost impossible to short Bitcoin in 2016… It wasn’t great, but it’s not critical. 
 

Mike Novogratz

Founder, Galaxy Digital

In February Mike expressed the opinion that, thanks to institutional money, Bitcoin will reach $ 8,000.