According to analysts at the multinational investment bank Goldman Sachs, the growing mainstream acceptance might not result in higher prices for digital assets. Instead, the institution opined that the USD value of bitcoin and the altcoins correlate with inflation and other economic events.

Bitcoin May Not Go Up Due to Adoption

Many experts predict that the prices of most cryptocurrencies will surge should they receive wider mainstream acceptance. However, Goldman Sachs’ strategists Zach Pandl and Isabella Rosenberg are not convinced this will be the case.

“Crypto’s recent selloff underscores that mainstream adoption can be a double-edged sword. While it can raise valuations, it will also likely raise correlations with other financial market variables, reducing the diversification benefit holding in the asset class,” they noted.

In their view, the valuation of digital assets is positively affected by macro-economical factors like breakeven inflation, the prices of crude oil, and the USD value of “frontier” technology stocks. Contrarily, the government’s intentions to combat the financial turbulence could harm the primary cryptocurrency.

Earlier this week, Jerome Powell – Chairman of the Federal Reserve – reiterated the institution’s plans to raise rates and lower the Fed’s balance sheet in March. Shortly after his speech, BTC tumbled from $38,200 to below $37,000.

Pandl and Rosenberg concluded that the further development of blockchain technology, including applications in the Metaverse, “may provide a secular tailwind to valuations” for certain cryptocurrencies. On the other hand, those assets will not be immune to macroeconomic forces such as central bank monetary tightening.

BTC Needs to Steal Gold’s Attention to Reach $100K

At the beginning of 2022, Pandl highlighted a scenario in which bitcoin could reach the $100,000 milestone in the following years. According to him, though, this would happen if institutional investors start preferring purchasing bitcoin instead of gold.

“If bitcoin’s share of the store of value market were “hypothetically” to rise to 50 percent over the next five years, its price would increase to just over $US100,000, for a compound annualized return of 17 percent or 18 percent.”

A few days later, Guido Buehler – Chief Executive Officer of the Swiss-based SEBA Bank – also stated that bitcoin could more than double its price sometime this year. The exec believes institutional investments will be the main factor for this:

“Our internal valuation models indicate a price right now between $50,000 and $75,000. I’m quite confident we are going to see that level. The question is always timing.”

Featured Image Courtesy of WSJ

The former Chief Executive Officer of Goldman Sachs – Lloyd Blankfein – opined that the ecosystem surrounding cryptocurrencies has evolved in the past year. As such, he raised hopes that the digital asset industry is “happening” despite the recent price crash.

Optimism During The Crash

The American banker who served as Goldman Sachs’ CEO until 2018 has not always been kind to the cryptoverse. At the beginning of 2021, he questioned bitcoin’s ability to be a store of value due to its massive volatility. He also touched upon private keys, saying they are confusing as people could easily lose them.

During his most recent interview with CNBC, though, Blankfein was more supportive. He noted that 2021 had been a highly successful year, and bitcoin and the altcoins have attracted trillions of dollars. Even though most digital assets have been deep in red for the past couple of days, the 67-year-old American believes that “crypto is happening:”

“Look, my view of it is evolving. I can’t predict the future, but I think it’s a big thing to be able to predict the present, like, ‘What is happening?’ And I look at the crypto, and it is happening.”

Speaking on the current price dip, Blankfein said it is not much of a concern since there is a considerable amount of capital invested in the asset class already. He also outlined that bitcoin and altcoins have their benefits to the financial network, such as “instantaneous transfer and reduction of credit risk.”

“And guess what? I would certainly want to have an oar in that water,” Blankfein concluded, hinting he might hop on the cryptocurrency bandwagon.

Crypto’s Current Condition

Even though Blankfein thinks “crypto is happening,” the current market situation is quite. Since the beginning of the year, most digital assets have been on a downtrend. Things are looking rather disappointingly for bitcoin, too. The biggest cryptocurrency by market capitalization finished the year with a price tag of around $47,000.

Considered by many as a hedge against inflation and even digital gold, the asset tumbled further at the beginning of 2021 after the Federal Reserve revealed plans to fight the monetary turmoil in the United States.

On that note, Mark Cuban – the owner of the Dallas Mavericks and a proponent of the crypto world – opined that BTC is not and will never become an inflation hedge.

In the following weeks, bitcoin continued its decline and at the moment of writing these lines, it is hovering around $34,000.