Goldman Sachs, one of the leading investment banks in the US said that Bitcoin is not taking the market share of Gold and the precious commodity is safe from the recent surge in Bitcoin prices.
According to a research note by the New York-based bank, some investors are concerned that Bitcoin is slowly replacing gold, but there is no evidence that Bitcoin’s rising popularity is an existential threat to gold.
The investment bank also mentioned the transparency issues associated with Bitcoin along with its risky nature as an asset. Goldman Sachs added that institutional and wealthy investors are still avoiding Bitcoin as an investment vehicle due to its volatile nature.
“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’s been some substitution, 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,” the research note states.
The price of Bitcoin jumped above $20,000 earlier this week to register all-time highs. As of writing, the price is hovering around $23,000, with a market cap of approximately $425 billion. JPMorgan predicted a $600 billion demand for Bitcoin in a research note on Monday and indicated that Bitcoin is attracting gold investors. Furthermore, the recent price surge faced criticism from several economists worldwide. David Rosenberg, a Canada-based economist called Bitcoin a massive bubble and added that people do not really know the future supply of Bitcoin. Despite the tag of a volatile asset, BTC is still trading near all-time highs.
The stance of Goldman Sachs on Bitcoin is different from JPMorgan. Ripple CEO, Brad Garlinghouse earlier mentioned that many people consider crypto as an inflationary hedge. Ray Dalio of Bridgewater Associates compared Bitcoin with Gold in a recent statement.