According to Goldman Sachs, gold offers investors a portfolio diversification benefit that is far superior than that of bitcoin.
The announcement comes about two weeks after it was rumored that Goldman Sachs was interested in purchasing cryptocurrency startups.
The release of the statistics for the Consumer Price Index on Tuesday caused a spike in the price of bitcoin, which caused it to reach $17,784 at its highest point.
Since the beginning of its existence, Bitcoin has been roundly criticised for the extreme volatility and speculative nature of its market. However, the recent developments in the cryptocurrency area appear to have reinforced those concerns. These ideas are shared by one of the largest institutions in the world, Goldman Sachs, so it is clear that these concerns are not unfounded.
Goldman Sachs goes with Gold
Goldman Sachs has just made it clear where it stands with regard to Bitcoin by stating that it anticipates gold will perform better than bitcoin over the long run. Goldman Sachs referred to cryptocurrencies as highly volatile assets and indicated that the possible run-up in the price of gold will be supported by real demand drivers.
The precious metal, as stated by the investment bank, is less likely to be influenced by the challenging financial circumstances. According to Goldman Sachs, gold is “a valuable portfolio diversifier” due to the fact that it has actual use cases in the real world, in contrast to Bitcoin, which has not yet found any. In addition to this, the bank said the following:
“The volatility of Bitcoin’s price on the downside was also exacerbated by systemic worries as a number of significant players filed for bankruptcy… Gold, which is more vulnerable to real demand forces, should be less of a drag on the market as a result of tighter liquidity. In addition, there is a possibility that gold will gain from structurally higher levels of economic volatility as well as a need to diversify stock exposure.
According to Goldman Sachs, the current value of Bitcoin is determined by the scope of its future use cases. This makes it very volatile as well as “a solution looking for a problem,” but it also explains why it has such a high value.
This comment from Goldman Sachs comes just two weeks after it was announced that the bank was conducting due diligence on a few different cryptocurrency startups.
Goldman Sachs is trying to acquire companies that are “priced more sensibly” as a result of the failure of FTX, which had a detrimental influence on a number of businesses associated to cryptocurrencies.
The price of bitcoin is benefiting from inflation.
The Consumer Price Index (CPI) reported a rise of 7.1% for the month of November, which was less than the 7.3% increase that had been anticipated. As a direct result of this, the stock market saw significant gains, and the optimistic feeling spread to the cryptocurrency market as well.
The price of bitcoin rose by 3.7% over the course of the past twenty-four hours, moving up from $17,200 to its current level of trade at $17,801. This increase took Bitcoin closer to its immediate resistance at $18,157, which needs to be transformed into a support floor in order for Bitcoin to recapture its previous price of $18,549.
If the latter price level were to be broken, the King Coin would have the chance to classify the inefficiency as existing between $18,721 and $19,244, and this range would be known as the Fair Value Gap (FVG).
Because of the turbulence of the market, a reversal in the trend is also a possibility, which would cause the price of bitcoin to peg the support levels at $17,577 and $17,081.
The price of bitcoin might drop all the way down to $16,719 if extreme negative conditions persist. A sustained move below this key support level would render the bullish thesis useless, leaving the king coin vulnerable to a move below $15,852 in the short term.