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Goldman Sachs: Mass Adoption of Cryptocurrencies Won’t Drive Price Up

It is often believed that a strong adoption of cryptocurrencies by the general public will imply an increase in the value of digital assets and therefore enrichment for investors. However, things might not go exactly as planned. Indeed, according to the bank Goldman Sachs, increased demand could simply translate into stronger correlations with traditional markets.

A simple strengthening of the correlation between cryptocurrencies and other assets

According to the bank Goldman Sachs, increased adoption of bitcoin (BTC) and other cryptocurrencies will not necessarily allow the price of digital assets to increase in dollars. The company revealed this in a note which was relayed by Bloomberg last Thursday.

In his publication, Bloomberg notes that the international banking giant claims that the general acceptance of digital assets would simply increase their correlation with other traditional asset classes, without any real impact on their price.

“While it may increase valuations, note the bank, cryptocurrency adoption will likely also increase correlations with other financial market variables, reducing the diversification benefit of holding the asset class.”

A controversial design

The comments from Goldman Sachs bank come at a time when the digital asset market is showing a very high correlation with equities, especially during this month. That said, projections for the rest of the year indicate that there will be only a weak recovery for cryptocurrencies that are on the decline in price.

That said, it should be noted that not all market specialists share the same opinion as Goldman Sachs. Other bitcoin theories specifically reject the idea of ​​a higher correlation to the rate of gain generated by other factors.

For many analysts, the decrease in supply in the face of broader cryptocurrency adoption will be beneficial, as it will inevitably lead to an increase in the prices of digital assets. Anyway, for the moment, there is no guarantee that the predictions will come true. There is therefore a chance that the paradigm will change over time and that the analyzes of each other will be wrong.

For Goldman Sachs, a massive adoption of cryptocurrencies in the next few years will not necessarily lead to an increase in the price of digital assets. However, this idea is contradicted by many other market players. All that remains is to wait for time to prove one camp or another right.


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Source: Cointribune

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