Goldman Sachs bashes cryptocurrency: Many will “trade to zero”

Goldman Sachs bashes cryptocurrency: Many will “trade to zero”

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Goldman Sachs’ global head of investment research, Steve Strongin, says get ready for many cryptocurrencies to “trade to zero” in a new Feb 5 report prepared for clients.


Interviewed by Bloomberg, Strongin says:

“The high correlation between the different cryptocurrencies worries me. Because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.”


Today’s cryptocurrencies lack long-term staying power because of slow transaction times, security challenges and high maintenance costs.


He predicts most of today’s virtual coins are not likely to survive and will be replaced by a small set of future competitors:

“Are any of today’s cryptocurrencies going to be an Amazon or a Google, or will they end up like many of the now-defunct search engines? Just because we are in a speculative bubble does not mean current prices can’t increase for a handful of survivors,” Strongin said. “At the same time, it probably does mean that most, if not all, will never see their recent peaks again.”


He said an important missing component in today’s cryptocurrencies is the lack of “intrinsic value.”


Strongin sees value in the underlying blockchain technology for financial applications, although the speed required for transactions is not adequate yet.


Visuals: courtesy Goldman Sachs.