Aaryamann Shrivastava
FXStreet
- 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 purchase crypto companies.
- Bitcoin price jumped to $17,784 following the release of the Consumer Price Index data on Tuesday.
Bitcoin has been subjected to criticism for its volatility and speculative nature for a very long time. But the recent developments in the crypto space have seemed to reinforce those concerns, which are echoed in the beliefs of one of the biggest banks in the world, Goldman Sachs.
Goldman Sachs goes with Gold
Goldman Sachs recently made its standing about Bitcoin clear when the bank said that it expects Gold to outperform Bitcoin in the long term. Calling the cryptocurrency a highly volatile asset, Goldman Sachs cited Gold’s potential run-up would be backed by real demand drivers.
According to the investment bank, the precious metal is less likely to be influenced by difficult financial circumstances. Goldman Sachs stated that Gold is “a useful portfolio diversifier” since it has actual real-world use cases over Bitcoin, which is yet to find one. Adding to the same, the bank stated,
“Bitcoin’s volatility to the downside was also enhanced by systemic concerns as several large players filed for bankruptcy… Tighter liquidity should be a smaller drag on Gold, which is more exposed to real demand drivers. Moreover, Gold may benefit from structurally higher macro volatility and a need to diversify equity exposure. (sic)”
As per Goldman Sachs, the current value of Bitcoin is driven by the scope of its future use cases, making it highly volatile as well as “a solution looking for a problem”.
This statement from Goldman Sachs came merely two weeks after the bank was reported to be performing due diligence on a few crypto firms.
Following the collapse of FTX, which negatively impacted many crypto-related companies, Goldman Sachs is looking to purchase firms that are “priced more sensibly”.
Bitcoin price enjoys the inflation rate
The Consumer Price Index (CPI) noted a 7.1% rise for the month of November, coming in lower than the expected 7.3%. Consequently, the stock market soared, and the bullish sentiment also reached the crypto market.
Bitcoin price observed a 3.7% increase in the last 24 hours as the cryptocurrency jumped from $17,200 to trade at $17,801. This rise brought BTC closer to its immediate resistance at $18,157, which needs to be flipped into a support floor in order to reclaim $18,549.
A breach of the latter price level would provide the king coin with an opportunity to tag the inefficiency at $18,721 to $19,244, labeled as the Fair Value Gap (FVG).
BTC/USD 4-hour chart
Given the volatility of the market, a change in the trend is also a possibility that would result in Bitcoin price tagging the support levels at $17,577 and $17,081.
Under extreme bearish conditions, BTC could observe a fall to $16,719. A close below this critical support level would invalidate the bullish thesis, leaving the king coin to tag the lows of $15,852.
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