Can gold and Bitcoin coexist? Goldman Sachs says sure
Bitcoin’s (BTC) parabolic spike in 2020 won’t hurt key traditional assets like gold, according to Goldman Sachs.
Goldman Sachs, one of the largest investment banks in the world, has reportedly sent a notice to investors reassuring clients that Bitcoin is not an existential threat to gold, Bloomberg reported on Dec. 18. “We see no evidence that the Bitcoin rally can cannibalize the gold bull market and believe the two can coexist,” the company wrote.
Still admitting that Bitcoin’s ongoing rally could steal some demand from gold investors, Goldman Sachs stated:
“Gold’s recent underperformance against real rates and the dollar has made some investors concerned that Bitcoin is replacing gold as the inflation hedge of choice. […] While there is some substitution, we don’t see Bitcoin’s increasing popularity as an existential threat to gold’s status as a currency of last resort. “
Amid Bitcoin, which hit new highs in December, global investors are increasingly getting into Bitcoin. Christopher Wood, global head of equity strategy at independent investment bank Jeffries Financial, has reportedly reduced his exposure to gold in an effort to buy more bitcoin.
According to a report by the Indian news agency Business Standard on December 18, the renowned market analyst is reducing its gold investment for the first time in several years. Wood wrote in a note to investors that his BTC allocations represent 5% of his portfolio:
“With the money invested in Bitcoin, the 50 percent weight of the physical gold bullion in the portfolio will be reduced by five percentage points for the first time in several years. If Bitcoin declines sharply from current levels after the historic breakout above the $ 20,000 level, it is intended to improve that position. “
According to the report, Wood plans to further increase exposure to crypto in the event of corrections. Still, the analyst took a stance similar to Goldman Sachs by remaining bullish on gold. “This does not mean that GREED and fear will give up gold. And the yellow metal should bounce back if the Fed remains cautious amid the dramatic cyclical recovery that is taking place on the other side of the pandemic in line with the base case of GREED & Fear, ”Wood said.
On December 17th, Bitcoin posted another all-time high, rising above $ 23,000. At the time of publication, Bitcoin is trading at $ 23,133 on Cointelegraph’s BTC price index. In contrast, gold prices fell on Thursday, with both spot hold and futures falling 0.3%. Gold lost about 10% from its August all-time high of $ 2,076.