Goldman Sachs - Most Cryptocurrencies Will Crash To Zero

Goldman Sachs - Most Cryptocurrencies Will Crash To Zero

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Without speculating a timeframe for losses in present coins, Strongin said huge price fluctuations in the virtual asset class are a clear sign the market is in a bubble.

In brief:

Goldman analyst Steve Strongin, in a report, stated that most virtual currencies will fall to zero, with only a handful dominating the market.

According to Goldman Sachs, most, if not all cryptocurrencies in the market today will go to zero, but stronger digital currencies may still survive. On Wednesday, the Wall Street behemoth in a research note warned that most of the world's 1,500+ cryptocurrencies were headed for zero.

On February 5, Goldman analyst Steve Strongin in a report stated that most virtual currencies will fall to zero and, investors should prepare for coins to lose all their value as they're replaced by a small set of future competitors.

Without speculating a timeframe for losses in present coins, Strongin said huge price fluctuations in the virtual asset class are a clear sign the market is in a bubble. He said, "The high correlation between the different cryptocurrencies worries me. Because of the lack of intrinsic value, the currencies that don't survive will most likely trade to zero," reported Bloomberg.

It is to be noted that reportedly Goldman's own bitcoin trading desk is expected to launch by June this year. With this, it will become the first Wall Street bank to step into the market of the highly controversial asset class.

In a research note, Steve Strongin, head of Goldman Sachs global investment research, stated, "Are any of today's cryptocurrencies going to be an Amazon or a Google, or will they end up like many of the now-defunct search engines? Just because we are in a speculative bubble does not mean current prices can't increase for a handful of survivors. At the same time, it probably does mean that most, if not all, will never see their recent peaks again."

The cryptocurrency markets have witnessed a massive selloff this week, with the total market cap falling some USD $550 billion. Earlier, Vitalik Biturin, the founder of Ethereum had also expressed similar views. Buterin four months back echoed similar views while addressing a crowd, that 90% of initial coin offerings (ICOs) built on the ether protocol will fail. According to him, the paradigm "Tokens 1.0," could face a dreadful end and the era referred to as "Tokens 2.0," could be here sooner than most realize. Unlike Tokens 1.0 which was built on rushed projects, bad ideas, and scams, the second generation of token sales will be free of all these previous mistakes.

According to Buterin, in order to maintain feasibility both as an investment asset and unit of transaction, cryptocurrencies will need to develop. The latest data of the January month shows that the era of Tokens 1.0 is still producing record revenues with $1.2 billion flowing into ICOs.

The note from Goldman analyst comes in a week that saw the price of Bitcoin hit a three month low. However, the note also points out that this near-extinction might result in the emergence of newer, stronger cryptocurrencies, according to Fortune.

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