Extreme volatility, high correlation and a lack of intrinsic value all spell trouble for the cryptocurrency market, according to Goldman Sachs. In a carefully worded research note on Wednesday, the Wall Street behemoth warned that most of the world’s 1,500+ cryptocurrencies were headed for zero.
Investors should expect the vast majority of cryptocurrencies to fall to zero, with only a small handful dominating the market, Goldman analyst Steve Strongin said in a Feb. 5 report.
Although Strongin didn’t speculate about a timeframe, he said massive price swings in the digital asset class are a clear sign the market is in a bubble. “The high correlation between the different cryptocurrencies worries me,” the analyst said, according to Bloomberg.
“Because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.” The cryptocurrency markets have experienced a chaotic selloff this week, with the total market cap falling some $550 billion from its peak. In the research note, Strongin added the following: Strongin’s firm has expressed keen interest in cryptocurrencies.
Goldman is expected to launch its own bitcoin trading desk as early as June, making it the first Wall Street bank to make markets in the highly controversial asset class. The views expressed by Goldman are in line with previous comments made by Vitalik Biturin, the founder of Ethereum. Read more from hacked.com…
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