Cryptocurrencies are in a Bubble - according to Goldman Sachs
Cryptocurrencies a bubble?
CIO of the Private Wealth Management Group at Goldman Sachs gave an interesting interview. According to him cryptocurrencies in the current state are in a bubble
“Our view is that while we like the concept of blockchain, and think it will evolve into a useful tool for companies, for the financial industry, we think cryptocurrencies in their current format, meaning that in the current incarnation, are in a bubble.”
Crypto like other bubbles from the past?
She compared crypto to some other bubbles from the past:
- TOPIX in 1990
- Nasdaq in 2000
- Tulip mania of the 1600s
She described cryptocurrencies as “astronomically” more of a bubble.
Some hope for crypto
In the same report she somehow contradicts the previous statements acknowledging the crypto make up less then 1% of global GDP. Market cap of the gold is 16 times higher than that, while the market cap of dotcom bubble was 14 times the current crypto market.
She also brings up the 2008 subprime crash, which wiped out 12 times the total current crypto market value.
Gold and Real Estate vs Crypto
She also noticed the gold and real estate, including housing are entirely speculative while crypto are starting to offer real world functionalities which will likely disrupt many sectors, including financial one.
“Is there room for a digital currency, maybe sponsored by one of the major central banks like the Federal Reserve? Yes. Could it be incredibly useful? Could it reduce transaction costs? Yes. But not these ones.”
So while she admits Crypto is a future, at the same time she doesn't believe any of the current cryptos will win the game.
Centralized financial institutions are right to fear cryptocurrencies
Whilst the rise of cryptocurrencies has certainly been meteoric and the current marketcap is still largely speculative, the notion that this is the largest economic bubble in history is a shame-faced attempt at spreading fear, uncertainty and doubt. It’s a clear indication of a highly worried centralized system facing a future in which it has no place.
It is a bubble and that's not bad. It just means it's unstable and likely many of these coins will be gone before the dust settles.
Between now and when that happens it's the Wild West!
It's an exciting time. Be happy. Not fearful. Just look for the coins that will survive the carnage lol.
Yeah, I agree with that. The last year was the year of all the cryptos, this year investors will likely become more selective. The best products will separate from the poor ones in my opinion. It's time to buy the value long term, but more speculative types may still get a nice income flipping basically anything.
I would say this year is still a 100x market. Next year 10x. By 2020 regulation will be at 100% and coins and products will get wiped out. People will go to bed with $1,000,000 in a coin and they’ll wake up with $0. It will be .com, app bubble, tulip mania all over. However if majors buy up exchanges and criminals keep mining unfairly regulations will come sooner and the bubble will pop earlier. So... its very exciting.
We'll see. Everybody's hoping for the best.