Goldman Sachs Claims Gold Will Outperform Bitcoin, Calling BTC a Solution in Search of a Problem

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Goldman Sachs believes that gold is a far more useful portfolio diversifier than Bitcoin. The statement came two weeks after Goldman Sachs reportedly sought to buy crypto companies. The price of bitcoin jumped to $17,784 after the release of consumer price index data on Tuesday.

Bitcoin has long been criticized for its volatility and speculative nature. But recent developments in the crypto space have seemed to reinforce those concerns, which echo the beliefs of one of the world’s largest banks, Goldman Sachs.

Goldman Sachs opts for gold

Goldman Sachs recently clarified its stance on Bitcoin when the bank said it expects gold to outperform Bitcoin in the long term. Calling the cryptocurrency a highly volatile asset, Goldman Sachs said gold’s potential surge would be supported by real demand drivers.

According to the investment bank, the precious metal is less likely to be influenced by difficult financial circumstances. Goldman Sachs said gold is “a useful portfolio diversifier” because it has real-world use cases on Bitcoin, which has yet to be found. Adding to the same, the bank said,

“Bitcoin’s downside volatility has also been bolstered by systemic concerns as several big players have filed for bankruptcy…Tighter liquidity should be less of a drag on gold, which is more exposed to the real drivers of demand. Additionally, gold may benefit from structurally higher macro volatility and a need for diversification of equity exposure. (sic)”

According to Goldman Sachs, Bitcoin’s current value is determined by the scope of its future use cases, which makes it highly volatile as well as “a solution in search of a problem.”

This statement from Goldman Sachs came just two weeks after the bank reportedly performed due diligence on a few crypto companies.

Following the collapse of FTX, which negatively impacted many crypto-related businesses, Goldman Sachs is looking to buy companies that are “more reasonably priced.”

Bitcoin price benefits from inflation rate

The consumer price index (CPI) rose 7.1% for the month of November, less than the 7.3% expected. Consequently, the stock market soared and the bullish sentiment reached the crypto market as well.

Bitcoin price observed a 3.7% increase in the past 24 hours as the cryptocurrency surged from $17,200 to $17,801. This rise has brought BTC closer to its immediate resistance at $18,157, which needs to be moved into a support floor in order to recover $18,549.

A violation of this latter price level would give the master coin an opportunity to mark the inefficiency from $18,721 to $19,244, labeled as the fair value gap (FVG).

BTC/USD 4 hour chart

Given the volatility in the market, a change in trend is also a possibility that would see Bitcoin price mark the support levels at $17,577 and $17,081.

Under extreme bearish conditions, BTC could see a drop to $16,719. A close below this critical support level would invalidate the bullish thesis, leaving the king coin to mark the lows of $15,852.

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