2021 seems to be the year when institutions are realizing the immense potential of crypto. This time it’s Goldman Sachs' turn as the American investment bank has now found something impressive about bitcoin. This week, they published a research note stating that Bitcoin is a new asset class that they intend to take more seriously. Who would have thought?
In their recent research about crypto, they interviewed several experts in the industry to get their opinions. The biggest names on the list were Michael Novogratz, co-founder of Galaxy Digital, and Michael Sonneshein, CEO of Grayscale. Goldman Sachs' Global Head of Digital Assets, Matthew McDermott, also had a say.
The question was simple: Should cryptocurrencies be considered a new institutional asset class? According to McDermott, bitcoin is now an investable asset — with its own set of rules and risks, but investable. He asserts that it’s a new asset class that people have been treating as such.
Bitcoin: One Of A Kind
As it was said before, bitcoin is not only an investable asset but it is a one-of-a-kind asset. As it is a relatively young asset, it is still in the adoption phase. Also, it does not behave like any other asset seen in traditional markets.
Despite all the comments about BTC as digital gold, it is often more aligned with risk-related assets. Only one thing is very clear: we are witnessing the birth of a new asset class.
Michael Novogratz recently remarked that we've hit a critical mass of institutional engagement. And we know it. We have seen how everyone from major banks to financial businesses are getting involved in crypto.
Michael Sonnenshein is another person who is fascinated by bitcoin. He said he hasn't found a single person who has done their homework on crypto that isn’t truly amazed by its potential as an asset class.
But of course, some people are not exactly fond of the cryptocurrency world. One of them is Professor Nouriel Roubini, economist, AKA Dr. Doom. Professor Roubini says crypto assets are not real assets.
His logic is that assets have some cash flow or utility that can be used in determining their fundamental value. According to Rubini, Bitcoin and other cryptocurrencies have no income or utility.
Despite Goldman Sachs' seal of approval on bitcoin, some institutions are still cautious. These doubts are completely logical as crypto asset classes are volatile and unregulated. But that doesn't mean it will be like this forever. Considering that it is a new asset class we are just at the beginning. Many new things are yet to come.
