JAKARTA The leading multinational investment bank and financial services company from the US, Goldman Sachs, believes that gold will outperform Bitcoin. According to the company, gold has a better way of diversifying a person's portfolio.
Reporting from Coinpeaker, Goldman Sachs also assessed that gold tends not to be affected by more intense financial situations such as Asian consumer purchases, central bank monetary demand, safe-haven investments, and industrial applications. Gold is claimed to have cases of non-specular use, unlike Bitcoin.
On the other hand, the opposite statement was made by the company which said in January that Bitcoin would smear gold. Goldman Sachs analyst Zach Pandl announced that Bitcoin would win the gold market share in 2022 as adoption and BTC increased to mainstream.
At the time Goldman Sachs stated this, Bitcoin had a market capitalization of 700 billion US dollars and a market share of 20 percent. On the other hand, gold is worth 2.6 trillion US dollars.
In addition, due to the correlations of their price movements in the past, some people refer to Bitcoin as digital gold. However, banks explain why they expect gold to outperform Bitcoin in the long term.
Meanwhile, both assets fell last year but gold began to recover and rose slowly from 0.23 percent the previous year. While Bitcoin has fallen about 60 percent from last year.
According to Goldman Sachs, Bitcoin is like a typical high-risk growth stock, with the only chance of getting a profit is when you sell some of your holdings. It notes that Bitcoin's value proposition is futuristic and doesn't solve the problem directly, making it a more unstable and speculative asset than Gold.
"The Volatence of Bitcoin to its negative side has also been increased by systemic concerns as several major players have filed for bankruptcy," Pandl said.
The big players include 3AC Capitals, Terraform Labs, Celsius Network, Voyager Digital, BlockFi, and FTX filing for bankruptcy this year, removing investor confidence in the cryptocurrency market.
Unlike Bitcoin, fear of decreasing the dollar value remains the main argument for gold bulls. Gold is also a traditional hedge against inflation and may benefit from additional macro volatility.
"Gold may benefit from higher macro volatility structurally and the need to diversify equity exposure," the paper added.
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