Owing to the high volatility of Bitcoin (BTC), Goldman Sachs analysts believe that gold should perform better than the largest digital currency in the long run.
This thought is also influenced by the fact that gold with its real demand drivers is hardly impacted by stricter financial conditions unlike cryptocurrencies including BTC. In other words, gold can be regarded as a useful ‘portfolio diversifier’, according to Goldman Sachs.
So far, gold has been discovered to be an asset class that has non-speculative use cases and this cannot be said concerning BTC. Based on the analysis conducted by Goldman Sachs, investors tend to utilize gold as a blanket in times of inflation and dollar debasement while Bitcoin is more or less a “risk-on, high-growth tech company stock”.
Is BTC Doing Better Than Gold?
However, some strategist from the Bank of America (BofA) perceives Bitcoin as a safe-haven asset citing that the digital currency has recently traded as a risk asset at a stretch. The strategists identified as Alkesh Shah and Andrew Moss went ahead to compare gold with BTC and ended up drawing some bullish conclusions from the latter.
“A decelerating positive correlation with SPX/QQQ and a rapidly rising correlation with XAU indicate that investors may view Bitcoin as a relative safe haven as macro uncertainty continues and a market bottom remains to be seen,” the strategists wrote
Also, Mark Yusko, longtime hedge fund manager at Morgan Creek Digital, predicted that BTC will replace gold one day. Attempting to take a cue from these BofA strategists, Goldman Sachs analysts see Bitcoin as a solution seeking a problem.
They believe that it has future use cases and this assumption makes the asset class more volatile and speculative, unlike the yellow metal. Many banks foresee tighter financial conditions for Bitcoin In the future although for now, the demand for decentralized currencies has contributed to mainstream BTC adoption.
The latest implosion of FTX as well as bankruptcies filed by several crypto firms have contributed to the present outlook of Bitcoin. “Bitcoin’s volatility to the downside was also enhanced by systemic concerns as several large players filed for bankruptcy,” as per a published statement.
Noteworthy, gold is marginally up year-on-year, unlike BTC which has plunged by 75% this year alone.