Goldman Sachs

Goldman Sachs Says Bitcoin is Starting to Mature

Bitcoin is showing signs of maturity, but the institutional investment in Bitcoin is still very small, according to Goldman Sachs’ global head of commodities research. 

In an interview with CNBC, Goldman Sachs’ Jeff Currie said Bitcoin’s remarkable surge has attracted greater institutional interest. “I think the (Bitcoin) market is beginning to become more mature,” Currie said.

Investors increasingly view Bitcoin as a store of value similar to gold, to shift some of their cash into Bitcoin to lessen the impact of depreciation, amid the economic stimulus from governments in the face of the pandemic downturn. 

After more than 300% gain in 2020, Bitcoin surged to a record high of nearly $42,000 last week, but saw a recent sell-off. At the time of writing, Bitcoin is trading at $33,085, down 3.7% over the last 24 hours. Its price is still up roughly 15% since the start of the year.

“I think in any nascent market you get that volatility and those risks that are associated with it,” said Currie. “The key to creating some type of stability in the market is to see an increase in the participation of institutional investors and right now they’re small.” 

Currie believes more institutional money is needed to stabilize the market. Of the more than $600 billion invested in Bitcoin for now, roughly 1% of it is institutional money, he said. 

Additionally, Currie says it’s “very difficult to forecast” Bitcoin’s price due to the level of volatility and uncertainty in the market.

Institutions Waiting to Buy Bitcoin

Goldman Sachs is one of the Wall Street giants which have changed the tune on Bitcoin and cryptocurrencies. Earlier, JPMorgan’s strategists have said Bitcoin could surge as high as $146,000 in the long term, as Bitcoin competes with gold as a safe-haven asset.

On another note, Mike Novogratz, CEO of Galaxy Digital, says he remains positive after Bitcoin’s recent sell-off.

“This is not November 2017,” Novogratz told The Block in a podcast. “The bitcoin-as-a-hard-asset story remains intact,” Novogratz added. “This is a wash-out, a position wash-out. I don’t think it will be long-term damaging. $30,000 should hold.” 

More people have heard the Bitcoin story, according to Novogratz, and a price correction won’t meaningfully undercut that progress. There are still institutions waiting to buy, he said. “Insurance companies, asset managers, big institutions haven’t bought bitcoin yet and they want to.”