Goldman Sachs Warns Adoption Won’t Boost Crypto Prices

Goldman Sachs has warned crypto buyers that the token’s increasing acceptance will no longer drive prices and that macroeconomic factors are now having a greater impact on the market. The company also appears to have downplayed its interest in launching a stablecoin.

Goldman Sachs warns that the launch will not boost crypto prices

Bloomberg reports that the cryptocurrency price warning was issued by two Goldman Sachs strategists, Zach Pandl and Isabella Rosenberg.

The duo claim that recent sales strategies show that adoption isn’t driving prices higher. They explained that recent crypto sell-offs show that “mainstream adoption can be a double-edged sword.” They explained:

“While the acquisition may improve valuations, it will also likely increase correlations with other financial market variables and reduce the diversification benefits of owning the asset class.”

Instead, the authors argue, macroeconomic factors and price movements in conventional macro assets are likely to drive prices over the long term.

According to them, the advancement of blockchain technology, including applications in the metaverse, could create a windfall for the valuation of certain digital assets over time.

“But these assets will not be immune to macroeconomic forces, including central bank monetary tightening.” the authors note.

In fact, according to the duo, the correlation between crypto prices and other macro assets has now increased to the point that crypto is “currently at the center of recent rotations between asset classes.”

They point to a clear positive correlation of Bitcoin (BTC) price with “consumer price risk factors” including “breakeven inflation” and crude oil prices – as well as the company’s equity technology. On the contrary, there is currently a negative correlation between crypto prices, real interest rates and the USD.

As reported, central banks such as the Federal Reserve have tightened monetary policy in recent months, leading to rising interest rates and a surge in the USD – factors affecting cryptocurrencies and tech stocks.

Goldman Sachs talks about the stablecoin plan

Meanwhile, Goldman Sachs could also become the latest major player to curtail — or at least delay — its so-called “global” stablecoin program.

After a week in which Meta (formerly Facebook) reportedly sold its own stablecoins and intellectual property, Bloomberg quotes a spokesman for Goldman Sachs as saying it has no intention of selling it.

“We continue to see the value in working closely with private institutions to create a universal stablecoin that meets legal and regulatory requirements and has transparent governance.”

The company did not disclose the identity of these “private entities.”

Goldman Sachs first spoke about its 2020 stablecoin plans and has previously invested in Circle, the creator of the dollar-pegged USD (USDC) stablecoin.

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