Goldman Sachs Claims Gold Will Outpace Bitcoin, Calling BTC “a Solution Looking for a Problem”
- Goldman Sachs believes that gold is a far more useful portfolio diversifier than Bitcoin.
- The statement came two weeks after Goldman Sachs was reported to be looking to buy crypto companies.
- Bitcoin price jumped to $17,784 after the release of consumer price index data on Tuesday.
Bitcoin has been subject to criticism for its volatility and speculative nature for a very long time. But recent developments in the crypto space have seemed to reinforce these concerns, which are reflected in the belief of one of the largest banks in the world, Goldman Sachs.
Goldman Sachs goes with gold
Goldman Sachs recently made its position on Bitcoin clear when the bank said it expects Gold to outperform Bitcoin in the long term. Calling the cryptocurrency a highly volatile asset, Goldman Sachs said Gold’s potential rally would be supported by real demand drivers.
According to the investment bank, it is less likely that the precious metal will be affected by difficult economic conditions. Goldman Sachs stated that gold is “a useful portfolio diversifier” since it has actual real-world use cases over Bitcoin, which has yet to find one. In addition to the same, the bank stated,
“Bitcoin’s volatility to the downside was also compounded by systemic concerns as several major players filed for bankruptcy … Tighter liquidity should be less of a drag on gold, which is more exposed to real demand drivers. Also, gold could benefit from structurally higher macro volatility and a need to diversify equity exposure. (sic)”
According to Goldman Sachs, the current value of Bitcoin is driven by the scale of its future use cases, making it highly volatile, as well as “a solution looking for a problem”.
This statement by Goldman Sachs came just two weeks after the bank was reported to be conducting due diligence on a few crypto firms.
After the collapse of FTX, which negatively affected many crypto-related companies, Goldman Sachs is looking to buy firms that are “priced more sensibly”.
The Bitcoin price is enjoying the rate of inflation
The consumer price index (CPI) recorded an increase of 7.1% for the month of November, and came in lower than the expected 7.3%. Consequently, the stock market rose, and the bullish sentiment also reached the crypto market.
Bitcoin price has seen a 3.7% increase in the last 24 hours as the cryptocurrency jumped from $17,200 to trade at $17,801. This increase brought BTC closer to its immediate resistance at $18,157, which needs to be turned into a support floor to recover $18,549.
A breach of the latter price level would give the royal coin an opportunity to mark the inefficiency at $18,721 to $19,244, labeled the Fair Value Gap (FVG).
BTC/USD 4-hour chart
Given the volatility in the market, a change in trend is also a possibility that would see Bitcoin price mark the support levels of $17,577 and $17,081.
Under extreme bearish conditions, BTC could observe a drop to $16,719. A close below this critical support level would invalidate the bullish thesis, leaving the royal coin to mark a low of $15,852.
