Crypto hodlers may not get rich from mainstream adoption – Goldman Sachs

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The adoption of Bitcoin (BTC) and cryptocurrency will not necessarily make its price higher in dollars, claims Goldman Sachs.

In a note seen by Bloomberg published on Thursday, the international banking giant claimed that the widespread acceptance of crypto assets would increase their correlation with other mainstream asset classes.

Goldman: Adoption is a ‘double-edged sword’

In a view contrary to that of many Bitcoin proponents, Goldman seemed firmly uninspired by the prospect of crypto as a tool for the enrichment of the mass population.

“While this may increase valuations, it will also likely increase correlations with other financial market variables, thereby reducing the diversification benefit of holding the asset class,” the note said.

Its authors, Zach Pandl and Isabella Rosenberg, further described mainstream adoption as a “double-edged sword”.

In other words, if Bitcoin or crypto became more correlated with existing assets, the possibility of asymmetric profit would be reduced.

The comments come as crypto markets are indeed exhibiting a higher correlation to equities, particularly this month, with projections for 2022 not favoring a strong recovery – at least initially.

Nonetheless, even Goldman itself didn’t fully buy into a narrative, earlier in January, estimating that BTC/USD could still reach $100,000 – somewhat ironically, stealing market share from gold and thus attracting more traditional investors.

Simple supply and demand?

Alternative theories for Bitcoin specifically avoid the idea of ​​a correlation exceeding the rate of gains generated by other factors in the future.

Related: Bitcoin Demand “Bear Market” Breakout Will Trigger Next BTC Price Surge – Analysts

The simple mathematical equation of decreasing supply in the face of wider adoption is being championed by analysts as a de facto guarantee of higher prices against fiat currencies in the future.

Bitcoin’s predictable issuance schedule combined with the growth of wallet entities equates to something that continues to occur despite short-term price weakness.

Bitcoin wallet addresses holding at least 1 BTC chart against BTC/USD. Source: LookIntoBitcoin

The retracement that began in November, meanwhile, failed to dampen the enthusiasm of large portfolio holders, data from monitoring resource Santiment shows.

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