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Bitcoin is never coming back, Goldman Sachs says

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  • Goldman Sachs’ investment strategy group says bitcoin
    will continue to decline.
  • It also says the virtual currency meets none of the
    three definitions of usable money and makes up just 0.3% of
    global GDP.
  • Bitcoin has declined by 45% in 2018.


  • Follow bitcoin in real-time here. 


Despite
headline-making plans
to open a bitcoin
trading desk earlier this year, Goldman Sachs still isn’t sold on
the virtual currency.

In a midyear economic-outlook report, the bank’s investment
strategy group says the price of bitcoin is likely to decline
even further than the 45% it has in the first seven months of
2018.

“Our view that cryptocurrencies would not retain value in their
current incarnation remains intact and, in fact, has been borne
out much sooner than we expected,” the team lead by chief
investment officer Sharmin Mossavar-Rahamani said.

“We expect further declines in the future given our view that
these cryptocurrencies do not fulfill any of the three
traditional roles of a currency: they are neither a medium of
exchange, nor a unit of measurement, nor a store of value.”

Cryptocurrencies — and  especially the
blockchain technology that underpins their distributed nature —
have been heralded as disruptors to the global financial system,
theoretically allowing for more efficient databases, quicker
transactions, and more transparent operations. For now, at least,
Goldman maintains they won’t have much of an impact on any other
asset class.

“Importantly, we continue to believe that such declines will not
negatively impact the performance of broader financial assets,
because cryptocurrencies represent just 0.3% of world GDP as of
mid-2018,” the report said. “In fact, we believe that they garner
far more traditional media and social media attention than is
warranted.”

In May, Goldman touted its plans for a bitcoin trading operation.
Two of the planned executives for the unit
sat down with the New York Times
to discuss how the bank
plans to get regulatory approval and calculate risks inherent to
the nascent space. For now, at least, Goldman’s bitcoin
operations will be limited to institutional investors.


You can read the full mid-year investment outlook here.

Get the latest Goldman Sachs stock price here.

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