A Swiss Bank is responding to a recent report from Goldman Sachs that declares Bitcoin (BTC) is neither an asset class nor a suitable investment.
Swissquote’s head of digital assets Chris Thomas released a point-by-point rebuttal to the report. He begins with a comparison between Bitcoin’s volatility and wild swings in traditional markets.
“Absolutely, Bitcoin did fall 37% on March 12, 2020. And just one month later, oil markets plunged 333% in the space of 24 hours, nearly 10x a greater drop, touching a low of minus $40 per barrel at one point. In December 2019, Goldman Sachs predicted the average oil price through 2020 would be $63 per barrel.”
Regarding Goldman’s assertion that investments should not be reduced to a need for others to pay a higher price, Thomas responds that traditional markets also function on an assumption of capital appreciation.
“The ultimate decision to buy (or sell) comes down to whether we believe the price will go higher (lower) and hence whether someone else is willing to pay a higher (lower) price for that investment…
Bitcoin, and select others, are the driving force behind the paradigm shift which is happening. Goldman Sachs is ignoring the strong foundations of this emerging asset class based on cryptographic principles and a world where many, if not all, assets will be tokenised, and trading them will be democratised.”
As for the long-standing narrative that Bitcoin is primarily a tool for criminals, Thomas points out that Chainalysis concluded in a January 2020 report that only 0.08% of crypto transactions originate from the darknet markets and that criminal activity represented just 1.1% of total activity.
Bernard Madoff’s $65 billion scam in the fiat world dwarfs scams in the cryptocurrency world in terms of magnitude, he contends. Lastly, Thomas says the fact that major financial institutions such as Fidelity Investments and JP Morgan are confident enough to venture into the space shows that financial institutions do believe that cryptocurrency has a future.
Although security and the management of private keys remain challenges in the cryptocurrency space, Thomas argues that banks such as Swissquote maintain security and can also solicit deposit insurance in case of hacks.