Bitcoin’s volatility is too high for it to be considered a store of value, according to a senior Goldman Sachs executive.
Sharmin Mossavar-Rahmani, the head of the Investment Strategy Group for the Consumer and Investment Management Division at Goldman Sachs, told Canada’s BNN Bloomberg that Bitcoin does not meet the attributes that one would expect to find in store of value assets.
In a recent briefing on the institution’s 2021 outlook, Mossavar-Rahmani who is also the firm’s chief investment officer for Wealth Management, poured cold water on the idea that the first cryptocurrency is a new digital gold, according to the Feb. 4 report. She argued:
“Something with a long-term volatility of 80% can’t be considered a medium of exchange… Just because everybody piles into an idea and talks it up doesn’t mean it’s a store of value.”
A growing number of seasoned and respected Wall Street professionals disagree with Mossavar-Rahmani, among them MicroStrategy’s Michael Saylor. The company signed up more than 1,400 Wall Street professionals for its Feb. 3 virtual event, “Bitcoin for Corporations.”
And in late January, asset management firm CCB International Securities announced that it had sold one-third of its gold holdings for Bitcoin, recommending others follow suit.
Interestingly, Mossavar-Rahmani also compared Bitcoin’s bull run to the recent vertiginous growth in the value of GameStop (GME) shares. As Modern Consensus reported, the gaming retail chain’s stock garnered so much attention when Reddit’s WallStreetBets community pumped the much-shorted stock 700% in just two weeks—so high that it helped cause Bitcoin’s value to fall.
Mossavar-Rahmani’s decision to cite the “GameStop pump” as a way to bash Bitcoin is rather interesting considering that many believe the episode to have showcased how much need for Bitcoin and related technologies there is. In fact, some believe that this episode is the reason why tech mogul and the world’s richest person, Elon Musk, joined bitcoiners.
Much of the controversy surrounding the GameStop stock was spurred by crypto-friendly stock trading app Robinhood’s decision to stop allowing its users from acquiring it in an what appeared to be an attempt to protect the holdings of hedge funds who bet that it would decrease in value. Congress has promised an investigation.
Watchdog Capital’s Bruce Fenton suggested in late January that “shutting down trading to allow someone to cover a short position totally and completely breaks the integrity of the markets.” As a reaction to this apparent abuse of power by Robinhood, some suggested that decentralized finance systems that cannot be controlled by any centralized party are a potential long-term solution.