10.08.2020 – Special Report. The cyber-foreign currencies have recently shown an extremely bullish performance. Bitcoin, Ether and co. are the stigma of the criminal currency – the e-foreign currencies can be stored uncontrolled anywhere on the web. Now the absolution is looming: Requests to speak from the financial world point to a new acceptance. Apparently, the once ostracized foreign currencies are now becoming capable of satisfying their own needs.
Amazing turnaround at Goldman Sachs
Of all people, one of the biggest opponents of cryptos to date has just presented a massive 180 degree turn and signalled interest in the asset class. The Goldmans are considering introducing their own cryptocurrency, Mathew McDermott, the new global head of Goldman’s also new Digital Asset division, told CNBC television last Thursday.
Goldman Sachs had denied Bitcoin asset class status as recently as May. According to “Forbes”, the investment bank held a presentation in spring entitled “U.S. Economic Outlook and Implications of Current Policies for Inflation, Gold and Bitcoin”. It listed five reasons why Bitcoin is not an asset class in its own right.
Stablecoin in progress
Now titled “ValueWalk”, Goldman is working on a Stablecoin. Immediately, cheering electric bulls took to the blog. Konstantin Richter, founder of Blockdaemon judged: „Customer demand will drive revenue and open up new channels so it would only be detrimental to their business if they didn’t explore this opportunity.” We complement: In view of zero interest rates and the stellar performance of cryptos, many investors have turned away from the recently weakening dollar – and are now invested in e-currencies.
Dave Hodgson, Chief Investment Officer at NEM Ventures, judged „I expect that this move will be reassuring to Goldman Sachs investors, who otherwise may find it difficult to gain exposure to this innovative asset class. (…) This is an encouraging step for the space as a whole, but altogether unsurprising given recent investments made by competitors JPMorgan and Fidelity.”
Radical turnaround at JPMorgan
In fact, in May, JPMorgan, the largest American bank, also made a radical turnaround. In September 2017, JPM head Jamie Dimon had still called Bitcoin a “fraud” after BTC had plummeted from $20,000 to $4,000.However, according to “Forbes”, the bank now allows transactions with customers of two crypto exchanges – and Dimon even secretly met with the head of the largest exchange Coinbase. So the once greatest enemy is now an ally. Last year, by the way, the bank launched its own e-currency – but JPM Coin is linked to the dollar and therefore nothing more than an electronic derivative.
The professionals are long invested
And in June, Fidelity Investments had caused a sensation. The fund manager reported that 36 per cent of the 776 investors he surveyed in the USA and Europe were invested in cryptos or derivatives. BTC holds around a quarter, and Ether around 11 percent.
US banks now allowed to handle cryptos
The trend could increase even more, because the blog CoinTelegraph had good news for the bulls on July 22nd: According to this, the American banking supervisory authority Office of the Comptroller of the Currency (OCC) has granted all officially registered banks and savings banks permission to hold and settle cryptocurrencies. It literally said: “The OCC recognizes that, as the financial markets become increasingly technological, there will probably be increasing need for banks and other service providers to leverage new technology and innovative ways to provide traditional services on behalf of customers. In other words: the strong demand from customers has made this step unavoidable – e-foreign currencies are obviously becoming socially acceptable and suitable for the masses.
The Great Dollar Debasement
This is hardly surprising in times of dollar devaluation – in the wake of the mass corona stimuli, investors are fleeing into alternatives to paper money. Gold, silver and even cryptos. The result is a respectable performance so far. Fund manager Raoul Pal of Real Vision on CoinTelegraph said that BTC is the only asset class worldwide that has balanced the growth of the balance sheets in the G4 central banks. These include the Bank of England, the Bank of Japan, the Federal Reserve, and the European Central Bank. For Pal, after all a former manager at Goldman Sachs, Bitcoin is likely to increase 50 to 100 times over the next five years due to the devaluation of global currencies.
However, we would advise you to keep an eye on government countermeasures – currency watchdogs and politicians do not like uncontrolled competition. A ban on cryptos is possible anytime and anywhere. We will keep an eye on the matter for you – the Bernstein Bank wishes successful trades and investments!
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