Goldman Sachs calls crypto assets a ‘new asset class’, marking a major shift in tone

Crypto assets are now considered an investable asset, and institutional clients are still interested in gaining some exposure to crypto assets.

Goldman Sachs calls crypto assets a 'new asset class', marking a major shift in tone

As the crypto market grows, it’s safe to assume that prominent investment banks are quietly moving from reluctantly accepting bitcoin to slowly embracing more. Most recently, an executive at major Wall Street bank Goldman Sachs said crypto assets are a “new asset class” and an “investable asset”.

It is interesting that a traditional investment bank would make such a judgment about a financial instrument that was once called worthless by Wall Street banks.

Moreover, this represents a significant shift in tone for Goldman Sachs, which asserted last May that crypto assets were not an asset class.

In a new report, Mathew McDermott, Goldman’s global head of digital assets, noted that while bitcoin has its own risks, because it is still a new technology, the crypto asset “is now considered an investable asset.

“Although it’s been compared to digital gold, it’s not performing as well as one might intuitively expect relative to other assets. So far it has tended to be more in line with risk assets. What’s notable is the extent to which clients and those outside of them see it as a new asset class, and we don’t often see a new asset class emerge.”

Currently, Bitcoin is currently worth $37,256, down 20.3% in the past week alone, due to Elon Musk’s shift in attitude towards Bitcoin and the ban on the cryptocurrency by prominent Asian payment institutions.

Despite the lingering regulatory uncertainty, institutional investors are still allocating to crypto assets.

McDermott noted that inconsistent regulatory action across the globe has hindered the further growth of the crypto asset industry. Indeed, the lack of legal and regulatory clarity poses a significant challenge for most investors, and other major economies such as the U.S. and Russia have yet to remove the regulatory fog, with the exception of Asian markets.

Nonetheless, despite the lingering regulatory uncertainty, institutional investors are still allocating to crypto assets.

McDermott acknowledged that institutional clients are still interested in gaining some exposure to crypto assets.

“Overall, the discussions with institutional clients revolve around how they can learn more about the topic and how to get into the space, not just the issues around bitcoin or other crypto assets, which were really the main topics just a few years ago.”

“Beyond that, what asset managers and macro funds are interested in is whether crypto assets fit into their portfolios. If they fit, how to get exposure through instruments on the blockchain to trade physical objects, or through other types of products (usually futures).”

According to the Goldman Sachs executive, hedge funds are among the most active in the crypto-asset space, seeking to profit from the “structural liquidity” in the market.

All in all, positive signs are emerging, while bitcoin has soared 12.52% in the last 24 hours. More billionaires, like hedge fund manager Ray Dalio, also said last night that they own some bitcoin, which is a big change.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/goldman-sachs-calls-crypto-assets-a-new-asset-class-marking-a-major-shift-in-tone/
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