Goldman Sachs, a popular Wall Street investment firm, has made some revelations about gold in comparison to BTC. The firm expects gold to surpass the world’s leading cryptocurrency, BTC, based on long-term investment and demand.
Meanwhile, Goldman Sachs added that it expects tighter financial regulations to impact the cryptocurrency sector more. The firm noted in a research note that gold is a valuable portfolio diversifier because it has created non-speculative utility cases.
But by comparison, BTC has not created a single one. Goldman Sachs noted that traders use gold to protect themselves from dollar depreciation and inflation. However, BTC is similar to a fast-growing, high-risk tech company stock which isn’t suitable for all categories of investors.
BTC’s Value Proposition
The investment firm further said that the value proposition of BTC comes from the coin’s future usage in real-world applications. But at the moment, the coin is more speculative and volatile than gold.
The bank has also predicted that as financial regulation tightens, the willingness of investors to invest in decentralized digital currencies may wear off. Goldman Sachs also wrote that systemic worries and numerous top industry players declaring bankruptcy increased BTC’s downward instability.
The players mentioned are an apparent reference to the crash of crypto lenders Celsius and BlockFi, FTX crypto exchange, and Three Arrows Capital. Goldman Sachs’ notes further revealed that the net speculative stakes in gold and BTC had decreased dramatically over the past year.
The note further states that there has been an increase in the value of gold year-over-year (YOY). But BTC’s value has depreciated by 75 percent over the same period.
According to the investment firm, gold is more exposed to actual demand drivers. Hence, tighter liquidity has a lesser impact on it.
The firm further states that examples of these demand drivers include central bank monetary demand, Asian consumer buying, and applications in industry. Meanwhile, some investors remain optimistic about a surge in BTC’s price.
At the beginning of this month, billionaire investor Tim Draper reiterated his belief that BTC would still trade at $250,000, adding that the coin will hit $250,000 by June 2023.
Mike Novogratz, CEO of the crypto investment firm Galaxy Digital, also shared the same sentiment as Draper. Novogratz further claimed that BTC would trade at $500,000 in the future.
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