Eyes Roll as Goldman Sachs Flip-Flops on Clients' Crypto Appetite

Goldman Sachs has been a staple of the investment industry for over one hundred years, establishing a legacy in the financial world unmatched by most. Despite its age, Goldman Sachs has remained at the forefront of its sector and has retained an esteemed reputation throughout its years.

Until crypto.

For many of us, 2024 has so far been defined by TradFi aping into crypto. Bitcoin ETF approvals sent BTC to all-time highs and Ethereum ETF applicants have been waiting (im)patiently in the wings. Watching the marriage between Web3 and TradFi blossom is encouraging for both parties and participants of both sectors, unlocking a breadth of opportunities.

However, like any first-generation product, this particular transition from institutional Web2 to Web3 is still in its infancy and has yet to iron out all its kinks.

Despite the growing hunger from TradFi for crypto, it now seems that Goldman Sachs is having trouble establishing their crypto stance as well as perceiving their own clients' appetite.

Bitcoin's Gold Sacks

Goldman Sachs has remained relatively positive towards crypto over the past few years. In 2021, the investment juggernaut launched its crypto trading desk, offering cash-settled Bitcoin option and Ethereum option trading, and CME-listed Bitcoin and Ethereum futures.

A 2022 report from the firm said a $100,000 BTC price target was viable in the future. “Bitcoin may have applications beyond simply a ‘store of value’ — and digital asset markets are much bigger than Bitcoin,” the report claimed.

“But we think that comparing its market capitalization to gold can help put parameters on plausible outcomes for Bitcoin returns.” 

Even amid Wall Street giant's biggest layoffs since the financial crisis of 2008, Goldman Sachs' digital asset team continued to hire more people and explore the potential of blockchain technology in 2023.

Things continued to look positive recently too. Towards the end of last month, the firm revealed that their largest clients are "active or exploring" in the crypto space.

Max Minton, Goldman’s Asia Pacific head of digital assets, said, "The recent ETF approval has triggered a resurgence of interest and activities from our clients."

“Many of our largest clients are active or exploring getting active in the space,” he added. “It was a quieter year last year, but we’ve seen a pickup in interest from clients in onboarding, pipeline, and volume since the start of the year.”

Sacking Off Bitcoin

However, just days after Minton's comments came a shocker from the investment giant. Speaking to the Wall Street Journal, Sharmin Mossavar-Rahmani, chief investment officer of Goldman Sach's Wealth Management unit, cast shade on Bitcoin and digital assets.

"We do not think it is an investment asset class," she said. “We’re not believers in crypto.”

Her skepticism comes from the difficulty in evaluating and pricing crypto. “If you cannot assign a value, then how can you be bullish or bearish?” she rhetorically asked. “The rule of law and systems of checks and balances matter.”

Bitcoin also “creates absolutely no value in any shape or form," according to the crypto skeptic.

Mossavar-Rahmani further contradicted her firm's stance by claiming her clients are not enquiring about the asset class.

Overlooking her own contradiction, Mossavar-Rahmani lambasted the crypto industry for being hypocritical, stating crypto fans “all proclaim democratization of finance, yet the main decisions end up being driven by a few controlling people.”

So which is it? Is Bitcoin an investable asset or not for Goldman Sachs? Are Goldman Sachs clients exploring the asset class or not?

Coldman Sachs

If Mossavar-Rahmani's words are to be believed, it would appear that Goldman Sachs' warmth towards crypto is limited. However, Mossavar-Rahmani's might not be truly reflective of the firm itself. As CoinDesk argues, "By “we” she does not mean Goldman Sachs, just the Asset & Management Division."

"We should bear in mind that she could be speaking about the category characteristics and not about whether or not crypto is investable," the publication suggests.

But even CoinDesk struggles to spin Mossavar-Rahmani's wording about crypto creating "absolutely no value in any shape or form."

"Okay, this one is really hard to defend," CoinDesk concedes. "But, maybe, Mossavar-Rahmani was referring to the “assigned value” we looked at in the previous section. Maybe she meant that if there is no established model spitting out a number, there is no value?"

Sounds like splitting hairs to us.

However, should you really care what Goldman Sachs clients think? Or even what Goldman Sachs themselves think? Sure, they've proven themselves time and time again with their investment prowess, steering their clients towards maximized returns and healthy portfolios, but this doesn't guarantee success in crypto.

Whilst Goldman Sachs makes their mind up about crypto and whether their clients are game or not, your time is better spent interacting with those who do see value in the asset class. There are plenty to choose from.

Elsewhere