Goldman Sachs & Cryptocurrency Reincarnation

Goldman Sachs fund manager Sharmin Mossavar-Rahamani recently asserted a pessimistic outlook for cryptos:

In a midyear economic-outlook report, the bank’s investment strategy group says the price of bitcoin is likely to decline even further than the 45% it has in the first seven months of 2018.


“Our view that cryptocurrencies would not retain value in their current incarnation remains intact and, in fact, has been borne out much sooner than we expected,” the team lead by chief investment officer Sharmin Mossavar-Rahamani said.

The negative viewpoint seems to be predicated on the zero-value characteristics of cryptos:

“We expect further declines in the future given our view that these cryptocurrencies do not fulfill any of the three traditional roles of a currency: they are neither a medium of exchange, nor a unit of measurement, nor a store of value.”

What is noteworthy here is the term in their current incarnation. Digital notes offer a new incarnation for cryptocurrencies, where intrinsic value is represented on a discounted income cashflow basis, and where synthetic income/price ratios are even applicable, allowing digital currency investors to form portfolios that can be valued like REITS and businesses. At the same time, they contain the exact same free utility that cryptocurrencies such as Bitcoin do, potentially making them hyperinflation-adjusted ultra-alpha-coefficient investments such as Ethereum in 2015-2017.

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