Bitcoin requires more institutional funds for stability: Goldman Sachs
A Goldman Sachs analyst believes Bitcoin is on a path to maturity, and more institutional funds are needed to stabilise the market
Goldman Sachs analyst Jeff Currie believes that Bitcoin (BTC) is on a path to maturity, adding that more institutional money will stabilise the market. The analyst made his views known during an interview with CNBC on Tuesday, adding that Bitcoin’s remarkable run has attracted Wall Street interest.
Currie, Goldman Sachs’ head of commodities research pointed out that despite Bitcoin’s massive growth, more institutional funds are needed to stabilise it. The institutional funds are needed to avoid the type of crash that saw Bitcoin’s price declining by roughly 20% on Monday. BTC price dropped to nearly $32,000 after reaching a high above $40,000 last week. However, it is recovering and currently trading close to $38,000.
Currie said, “I think the market is beginning to become more mature. I think in any nascent market, you get that volatility and those risks that are associated with it“. Currie maintains that the key to creating a certain level of stability in the Bitcoin market is to bring about an increase in institutional investors’ participation. Currently, institutional participation in Bitcoin is small. Currie claims that out of the total $600 billion Bitcoin market cap, institutional investors account for roughly 1%.
An increasing number of institutional investors are throwing their weight behind Bitcoin. Famous investors Paul Tudor Jones and Stanley Druckenmiller have already ventured into BTC. Furthermore, firms like MicroStrategy, MassMutual and Ruffer Investment Company have all taken up sizeable Bitcoin positions.
Last month, Skybridge Capital launched its Bitcoin fund with $25 million. It is working on increasing its stake in the market over the coming months. Guggenheim is another institutional investor that is also looking to enter the crypto market. The investment firm’s SEC filing shows it wants to invest $500 million in Bitcoin via the GBTC.
Investors increasingly view Bitcoin as a store of value, with the cryptocurrency recording unprecedented growth despite the economic effects of Covid-19. JPMorgan strategists predict a Bitcoin rally to $146,000 in the long-term while Guggenheim’s Chief Investment Officer thinks that the cryptocurrency is worth around $400,000.
Goldman Sachs wasn’t a big fan of Bitcoin initially, but the investment bank has changed its tune in recent years.
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Hassan Maishera, @KhareemSudlow