Goldman Sachs’ Bitcoin opinion will change with time

On 25 May 2020, when Goldman Sachs announced that they were going to host a call involving Gold, Inflation, and Bitcoin, a sense of exhilaration ran wild in the crypto-community.

When the institutional call commenced on the 27th, the same community bombarded the premier investment firm with accusations of a lack of credibility and ignorance.

Listing five reasons against the world’s largest digital asset, Goldman Sachs told its investors that cryptocurrencies are a bad investment.

However, the underlying story could be something else in the future.

Goldman Sachs and Wall Street

After Goldman Sachs’ presentation on Bitcoin, Dan Tapiero, Co-Founder of 10T Holdings, tweeted,

Goldman Sachs does not make fees when a client buys #bitcoin

Buying Btc is an implicit rejection of buying assets that Goldman Sachs sells upon which they make fees

Buying btc is a rejection of the worldview they sell upon which they make fees.

Long PTJ/Short GS
EVERY TIME pic.twitter.com/AIaiRojpeO

— Dan Tapiero (@DTAPCAP) May 27, 2020

Now, ideally, it is not a bad decision for Goldman Sachs to avoid cryptocurrencies. Goldman Sachs rarely does its business in the retail market and according to a recent Medium post, raising the credibility of an asset with which you cannot make money from is unavailing. It would just present Goldman Sachs’ clients the opportunity to take their money to a different firm.

That possibly might have been one of the reasons why Goldman Sachs disapproved of Bitcoin in the first place.

As we all know, the likes of JP Morgan, Fidelity, TD Ameritrade, etc. already have their own subsidiaries that deal with cryptocurrencies. Further, regulated firms such as Grayscale trade exclusively with institutional investors and their AUM is around $2 billion in Bitcoin. So, it is fair to say that big money is already entering the cryptocurrency space.

Hence, it is a reasonable shot in the dark that Goldman Sachs is trying to slow down market momentum with its disapproval so that they can possibly be a part of it as well. 

It is a huge proclamation based on speculation, but Goldman Sachs hasn’t shied away from changing its opinion in the past.

In 1998, Goldman Sachs was dismissive about Google‘s potential as well after the world-renowned search engine had gone live a year ago. However, a few years later in 2004, the investment firm was doing its best to underwrite Google’s IPO.

Then, while Goldman Sachs was the top choice, it lost the spot to Credit Suisse First Boston and Morgan Stanley after Goldman Sachs’ CEO Hank Paulson tried to sidestep Google’s order by reaching out to Kleiner Perkins, one of Google’s early investors.

Does Bitcoin need Goldman Sachs?

At the moment, Goldman Sachs has over $2 trillion worth of assets under management, an embarrassingly large amount of capital. However, in comparison to the $700 trillion in derivative financial products, $2 trillion sounds very insignificant.

A minor fraction of the $700 trillion flowing into Bitcoin would change the entire landscape, so the firm’s opinion is unlikely to impact Bitcoin in the long run.

However, just like with Google, it would not be a surprise to see it re-evaluate its position with Bitcoin, if the larger market sentiment for the digital asset continues to grow.