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October 4, 2022
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Goldman Sachs says Bitcoin’s rising popularity won’t hurt gold

Goldman Sachs believes that Bitcoin is not “cannibalizing” gold

Gold and Bitcoin may coexist, according to Goldman Sachs Group Inc., which said that while the largest digital currency may be pinching some demand from the oldest of havens, the position of the precious metal will endure.

“The recent underperformance of gold against real rates and the dollar has left some investors concerned that Bitcoin is replacing gold as the inflation hedge of choice,” the bank said in a note. While there has been some substitution, “we don’t see Bitcoin’s growing popularity as an existential threat to gold’s status as the currency of last resort.”

Bitcoin made a major recovery this month, surpassing $ 23,000 per currency on Thursday, having passed the $ 20,000 mark for the first time on Wednesday. Its rise has sparked debate over whether BTC will take the role of gold, with the JPMorgan Chase & Co. arguing that the rise of cryptocurrencies in conventional finance is occurring at the expense of gold.

Rich institutions and investors shy away from cryptocurrencies due to “transparency issues, while speculative retail investment makes Bitcoin act as an excessively risky asset,” Goldman said.

“We see no evidence that the rise in Bitcoin is cannibalizing the bullish gold market and we believe that the two can coexist.”

Bitcoin more than tripled this year, while gold rose 24% after hitting a record high above $ 2,075 an ounce in August. Scott Minerd, of Guggenheim Investments, believes that the scarcity of Bitcoin, combined with the “unbridled printing of money” by the Federal Reserve, means that the currency is expected to reach $ 400,000.

Source: Bloomberg

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