Goldman Sachs analysts are not buying the idea that bitcoin — or any cryptocurrency — should be seen as a worthwhile investment for the firm's clients.
During a client-facing call on Wednesday, the investment bank presented a case that cryptocurrency is not a viable investment vehicle under the current economic environment.
"Cryptocurrencies including bitcoin are not appropriate as an asset class," the bank's analysis stated in a deck shared with call participants.
The deck pointed to cryptocurrencies' volatile price movements, its unstable correlations with other asset classes and the lack of evidence that it can serve as an inflation hedge as some of the major reasons.
Some of them may also be securities. "We believe that a security whose appreciation is primarily dependent on whether someone else is willing to pay a higher price for it is not a suitable investment for our clients," the deck stated.
The call also noted that while some hedge funds are trading bitcoin to take advantage of its high volatility, the investment group does not recommend bitcoin for its clients' investment portfolios.
"We also believe that while hedge funds may find trading cryptocurrencies appealing because of their high volatility, that allure does not constitute a viable investment rationale," Sharmin Mossavar-Rahmani, the chief investment officer for wealth management at Goldman Sachs said during the call.
The event was hosted by Goldman Sachs' Investment Strategy Group, which is a part of the bank's wealth management division that caters to high net worth clients and advises them on asset allocations.
Hedge fund heavyweight Paul Tudor Jones's recent public investment in bitcoin has added fuel to speculation that more big-name investors are on the verge of getting into crypto, which might open the floodgates to other institutional investors. But Goldman Sachs's wealth management team seems to be taking the opposite side of the bet.
"We do not recommend bitcoin on a strategic or tactical basis for clients’ investment portfolios even though its volatility might lend itself to momentum-oriented traders," the deck read.