Bitcoin (BTC) and “unsteady cryptocurrency mania” are the one of six factors that threaten Goldman Sachs 2018 market outlook, according to a July 2018 report[1] by the Goldman Sachs[2] Investment Strategy Group.
The report entitled “(Un)Steady as She Goes,” highlights “cryptocurrency mania” as one of several factors that could affect their initial market outlook for this year. Other factors listed included terrorism, the rise of populism, rising geopolitical tensions, and an increasing threat of cyberattacks.
The investment bank expects cryptocurrency[3] markets to “further [decline] in the future given our view that these cryptocurrencies do not fulfill any of the three traditional roles of currency...” According to Goldman Sachs, crypto is “neither a medium of exchange, nor a unit of measurement, nor a store of value.”
While the adjusted outlook lists cryptocurrency instability as a possible risk factor, it also states that “we continue to believe that such declines will not negatively impact the performance of broader financial assets, because cryptocurrencies represent just 0.3 percent of world GDP as of mid-2018.” The report adds that cryptocurrencies “would not retain value in their current incarnation.”
Bitcoin and Ether Price Indexes. Source: Goldman Sachs Investment Strategy Group[4]
In a previous report[5] in January, the group listed “cryptocurrency mania” as a factor that caused “higher levels of investor unease,” claiming that the sharp rise in Bitcoin's price[6] “has pushed it into bubble territory.”
At that time, Goldman Sachs refrained from making a forecast on crypto prices, claiming that even if Bitcoin’s price would “double or triple,” the company still does not believe it will retain its value in the long term.
