[FUD] Goldman Sachs: Mass adoption of cryptocurrencies won't lead to higher prices
[FUD] Goldman Sachs: Mass adoption of cryptocurrencies won't lead to higher prices

It is often believed that a strong adoption of cryptocurrencies by the general public will imply an increase in the value of digital assets and thus enrichment for investors. However, it may not be exactly as expected. In fact, according to Goldman Sachs Bank, increased demand could simply result in stronger correlations with traditional markets.

A simple strengthening of the correlation between cryptocurrencies and other assets

According to Goldman Sachs Bank, increased adoption of bitcoin (BTC) and other cryptocurrencies will not necessarily allow the price of digital assets to rise in dollar terms. The firm revealed this in a note that was relayed by Bloomberg on Thursday.

In its publication, Bloomberg notes that the international banking giant says that the general acceptance of digital assets would simply increase their correlation with other traditional asset classes, with no real impact on their price.

"While it may increase valuations," the bank notes, "the adoption of cryptocurrencies will likely also increase correlations with other financial market variables, reducing the diversification benefit of holding the asset class.

A controversial view

Goldman Sachs Bank's comments come at a time when the digital asset market has a very high correlation with equities, especially during this month. That said, projections for the rest of the year indicate that there will only be a weak recovery for cryptocurrencies with falling prices.

That said, it should be noted that not all market experts share the same opinion as Goldman Sachs. Other theories on bitcoin specifically reject the idea of a higher correlation to the rate of gain generated by other factors.

For many analysts, the decrease in supply in the face of wider adoption of cryptocurrencies will be beneficial, as it will inevitably lead to an increase in digital asset prices. Regardless, at this point, there is no guarantee that the predictions will come true. So there is a chance that the paradigm will change over time and that the analyses of both sides will be wrong.

For Goldman Sachs, a massive adoption of cryptocurrencies in the next few years will not necessarily lead to an increase in the price of digital assets. However, this idea is contradicted by many other market players. So all that remains is to wait for time to prove one side or the other right.

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Nathan George

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