Mass distribution of cryptocurrencies can lead not only to an increase in the rate of digital currencies, but also to the correlation of the value of such assets with traditional markets . In this regard, bitcoin and altcoins may lose their investment attractiveness.
This is stated in a study by the co-head of the currency strategy department at Goldman Sachs, Zach Pandl and his colleague Isabella Rosenberg, which was at the disposal of Bloomberg . Experts argue that cryptocurrency has ceased to be the best hedge against inflation.
Due to the ongoing rollback of the cryptocurrency market since November, they call the massive introduction of assets a “double-edged sword.” They attribute this to a decline in technology stocks due to higher interest rates by the US Federal Reserve.
FUTURE OF BITCOIN AND OTHER CRYPTOCURRENCIES
Pandl and Rosenberg emphasize that macroeconomic factors – that is, events outside of it – led to a 40% reduction in the capitalization of the crypto market. They attribute this to the growing interconnection between the worlds of crypto assets and traditional finance .
“While this may increase the value (of crypto assets – Ed.), it is likely to increase correlation with other financial market variables, reducing the diversification benefits of owning this asset class,” the note says.
The massive introduction of Bitcoin and other cryptocurrencies will lead to the fact that they will lose the ability to bring their investors an asymmetric return compared to other types of assets, Goldman Sachs strategists admit. This will also reduce their investment attractiveness.
At the same time, Pandl did not abandon the results of his previous analysis, according to which, within five years, Bitcoin could take away part of the share of gold in the investment market . After that, the rate of the first cryptocurrency will rise to $100 thousand, and its profitability will be 17-18%.
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Finally, Goldman Sachs summarized that the attractiveness and price of some assets can be increased by the further development of blockchain technologies, such as metaverses . At the same time, cryptocurrencies will not be able to lose their susceptibility to macroeconomic factors, in particular, the tightening of the monetary policy of central banks.
Billionaire Lloyd Blankfein, who had previously been skeptical about cryptocurrencies and repeatedly criticized them, changed his attitude towards this type of asset and even wanted to become an investor. He considers it pointless to deny that trillions of investments are pouring into the crypto sector, and a new ecosystem is rapidly growing around it.
