guide
The consumer and investment management department of investment banking giant Goldman Sachs stated in a client conference call on May 27 that it is not recommended to invest in BTC, which aroused strong repercussions inside and outside the encryption industry.
Summary
Summary
Topic: BTC is suitable for allocation as an asset. Goldman Sachs believes that from the perspective of asset attributes, BTC is still difficult to be called an asset, and it will be used for criminal activities, and its security is difficult to guarantee. Goldman Sachs' negative comments on BTC this time have met with strong responses from both inside and outside the encryption industry. We believe that Goldman Sachs' evaluation of BTC this time is obviously unfair. By all accounts, BTC is perfectly suited as an asset allocation to a portfolio, although the crypto industry did have some issues in its early days.
Quotes: The token market shrinks and rises. This week, the total market value of digital tokens was US$270.55 billion, up 3.2%; the average daily trading volume was US$100.54 billion, down 18.2%; the average daily turnover rate was 38.4%, down 7.6%. The current price of BTC is US$9,439, with a weekly increase of 2.2%; the average daily trading volume is US$31.6 billion, and the average daily turnover rate is 18.8%. The current price of ETH is 220.7 US dollars, with a weekly increase of 6.5%, the average daily trading volume is 11.2 billion US dollars, and the average daily turnover rate is 47.9%. This week, the BTC balance on the exchange was 535,700, an increase of 7,200 from last week. The balance of ETH on the exchange was 14.74 million, an increase of 16,400 from last week. In the BICS secondary industry, the market value of token asset management has grown significantly.
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Risk warning: regulatory policy risk, market trend risk
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1. Goldman Sachs accidentally attacked BTC, causing huge controversy
1.1 Goldman Sachs: BTC and other encrypted tokens are not an asset
On May 27, Goldman Sachs' consumer and investment management division held a session on the theme of "The Impact of US Economic Expectations and Current Policies on Inflation, Gold and BTC". In the final part of the conference materials, Goldman Sachs slammed the investment value of BTC. Goldman Sachs believes that encrypted tokens represented by BTC have the following major flaws:
Does not generate cash flow like bonds
Does not generate any benefits from global economic growth
The correlation with other assets is unstable, so it cannot provide continuous diversified investment income
Volatility is too high - 76% historical volatility and 4% daily average volatility, on March 12, 2020, the price of BTC fell by 37% in one day
There is no evidence that BTC is a hedge against inflation
Goldman Sachs believes that whether BTC can appreciate depends on whether others are willing to pay a higher price for it. If the value-added of an investment product mainly depends on whether others are willing to pay a higher price, then this product is not suitable for customers to invest. Goldman Sachs also believes that hedge funds may find trading encrypted tokens attractive because of their high volatility, but in Goldman's view this does not constitute a viable investment reason.
Goldman Sachs also believes that crypto tokens provide a conduit for illicit activity. Crypto tokens are used in Ponzi schemes such as PlusToken, ransomware ransom payments, money laundering, and dark web transactions.
1.2 Goldman Sachs' evaluation of BTC is unfair
It is inappropriate to directly compare BTC with traditional mainstream financial assets. BTC is known as "digital gold", which is essentially different from debt assets and equity assets, and is not suitable for direct comparison with bonds, stocks, etc. in nature.
Goldman Sachs believes that BTC cannot generate cash flow, that is, there is no holding income, but BTC can now be used as collateral to obtain interest income on some digital token trading platforms with token lending functions, and the annualized fixed income range is generally 2%~ 5%.
In terms of fighting inflation, the value of BTC mainly comes from its scarcity. With the explosive growth of money supply after the 2008 financial crisis, the price performance of BTC reflects that it can well hedge against the inflation caused by the flooding of global central banks.
In terms of volatility, the price volatility of BTC is greater than that of traditional assets, but BTC also provides a rate of return much higher than that of traditional assets.
The high volatility of BTC is largely due to the fact that the encrypted token market, as a brand-new global trading market, is still in the early stages of development, the infrastructure is not mature enough, and the public investors' awareness is relatively shallow. The supervision of the government is not in place, and the market mechanism and system are not perfect and sound.
With the development and expansion of the encrypted token industry, the "network effect" of BTC will make its ecology more and more powerful and sound, and these problems in the token industry will be resolved in the future. In fact, it can also be seen from the Goldman Sachs meeting materials that the volatility of BTC is gradually decreasing.
In addition, not all traditional financial institutions have a negative attitude towards digital tokens. Contrasting Goldman's view is another Wall Street giant, JPMorgan Chase & Co. In an analysis report released by JPMorgan Chase on May 22, BTC was regarded as a commodity and priced based on the marginal cost of producing BTC. According to JPMorgan, “Given the halving of BTC’s block reward on May 11, its intrinsic value has effectively doubled, and BTC is trading 25% below its intrinsic value, which is approximately $11,593.”
1.3 BTC is suitable for allocation as an asset
According to Woodbull Charts data, the current Sharpe ratio of BTC is 2.63, much higher than various traditional assets including gold and US stocks. According to The Block data, the correlation between BTC and the S&P 500 has dropped to 0.15 recently, and the correlation is almost negligible. These evidences suggest that BTC is suitable for allocation in investment portfolios.
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2. Market: The token market shrinks and rises
2.1 Overall market: Slightly shrinking and rising
This week, the ChaiNext Digital Asset 100 Index closed at 837.25 points, up 3.0%. The ChaiNext Digital Asset 100X Index closed at 2095.14 points, up 3.4%.
The total market capitalization of digital tokens this week was US$270.55 billion, an increase of US$8.41 billion or about 3.2% compared to last week. The market continued to rise all week.
The average daily turnover of the digital token market was US$100.54 billion, a decrease of 18.2% from last week, and the average daily turnover rate was 38.4%, a decrease of 7.6% from last week.
This week, the BTC balance on the exchange was 535,700, an increase of 7,200 from last week. The balance of ETH on the exchange was 14.74 million, an increase of 16,400 from last week.
The market value of USDT is 8.83 billion US dollars, an increase of 9.39 million US dollars from last week. The enthusiasm for funds entering the market has slightly decreased, and the USDT premium has increased slightly.
2.2 Core pass: BTC rebounded to around 9500
The current price of BTC is $9,439, with a weekly increase of 2.8% and a monthly increase of 7.3%. The average daily turnover is 31.6 billion US dollars, and the average daily turnover rate is 18.8%.
The current price of ETH is 220.7 US dollars, with a weekly increase of 6.5% and a monthly increase of 1.7%. The average daily turnover is US$11.2 billion, and the average daily turnover rate is 47.9%.
The current price of EOS is $2.61, with a weekly increase of 0.4% and a monthly decrease of 13.6%. The average daily turnover is US$1.94 billion, and the average daily turnover rate is 81.3%.
The current price of BCH is 238.2 US dollars, with a weekly increase of 1.6% and a monthly decrease of 7.5%. The average daily turnover is 2.82 billion US dollars, and the average daily turnover rate is 65.6%.
This week, the volatility of mainstream digital tokens has dropped slightly, and the price fluctuations have stabilized compared with last week. The monthly volatility of BTC decreased by 2.5% from last week; the monthly volatility of ETH decreased by 1.1% from last week; the monthly volatility of EOS decreased by 1.7% from last week; the monthly volatility of BCH decreased by 0.1% from last week.
2.3 BICS industry: The market value of token asset management has grown significantly
Among the top five BICS (Blockchain Industry Classification Standard, Blockchain Industry Classification Standard) secondary industries, the market value of the payment and settlement industry dropped from 71.2% to 70.9%. , The market value of the healthcare industry has a relatively high growth rate.
The BICS secondary industry with a relatively obvious increase in the number of tokens this week is the operation platform and token asset management, and the decline is more obvious for the bank services.
2.4 Market view: BTC fluctuates at a high level, and it is expected to continue to hit the 10,000 yuan mark
Under the high and volatile market, it is still necessary to guard against the risk of a callback. After a phased recovery, BTC fluctuated again at a high level, and the market failed to increase its volume effectively. It is still unclear whether this round of rise can continue. Short-term investors can consider lightening up their positions on rallies, while medium and long-term investors can seize the opportunity of callbacks to buy on dips.
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3. Output and popularity: The computing power of BTC and ETH has not changed much
This week, according to Google Trends, the search popularity of the term Bitcoin is 13, and that of Ethereum is 11.
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4. Industry news: The central bank's digital certificate continues to advance steadily
4.1 Yi Gang: The central bank’s digital token is steadily advancing, and there is no timetable for when it will be launched
Yi Gang, governor of the central bank, said in an interview with the media that at present, the research and development of digital renminbi follows the principles of stability, safety, controllability, innovation, and practicality, and is carried out internally in Shenzhen, Suzhou, Xiongan, Chengdu and the future Winter Olympics scene first. Closed pilot testing, there is no timetable for when it will be officially launched.
4.2 Hainan Blockchain New Policy: Support leading enterprises to explore the construction of digital asset trading platforms
On May 25, the Hainan Provincial Department of Industry and Information Technology issued a notice on "Several Policies and Measures of Hainan Province on Accelerating the Development of the Blockchain Industry". According to the notice, in order to accelerate the development of blockchain technology and industrial innovation, accelerate the construction of the Hainan Free Trade Zone (Hong Kong) blockchain pilot zone, and cultivate and create a "chain Hainan" blockchain industry ecology, ten policy measures have been formulated. And the trial period is three years. After the expiration, it will be further revised and improved according to the results of the implementation evaluation.
The ten policy measures are: establishing a blockchain joint innovation platform; establishing a blockchain industry fund; supporting the construction of blockchain infrastructure, and supporting enterprises registered and settled in Hainan to build blockchain public service platforms and computing power public service systems And blockchain infrastructure such as the underlying platform of the public chain with independent intellectual property rights, the underlying platform of the enterprise-level alliance chain; promote tourism consumption blockchain points; promote chain reform of e-government projects; encourage blockchain core technology research and development; implement blockchain Blockchain application demonstration project; hold the world blockchain conference; explore blockchain + financial sandbox supervision mechanism; and build blockchain industry clusters.
Note:
Note:
Due to some reasons, some nouns in this article are not very accurate, mainly such as: general certificate, digital certificate, digital currency, currency, token, crowdsale, etc. If readers have any questions, they can call or write to discuss together.
Due to some reasons, some nouns in this article are not very accurate, mainly such as: general certificate, digital certificate, digital currency, currency, token, crowdsale, etc. If readers have any questions, they can call or write to discuss together.
