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Goldman Sachs issued a note Saturday after two CIO roundtable sessions earlier this week attended by 25 CIOs from various long-only and hedge funds. They said their most favorite long is Growth style but least favorite on Bitcoin. Suggesting institutional adoption ia a ways off.

 Goldman CIO Survey June 2021

 

Bitcoin prices had grown an extra leg amid enthusiasm about institutional adoption earlier this year. The idea being pushed that it’s a store of value akin to “digital gold.” Pumps came with endorsements from big-name investors like Paul Tudor Jones and Stan Druckenmiller.

Bitcoin after rallying to almost $65,000  has retreated by more than $25,000 since then and was trading around $36,000 Sunday morning. It’s still up about 25% this year.

Earlier in the week Jeff Currie, global head of commodities research at Goldman Sachs, told CNBC show "Squawk Box Europe."on Tuesday that Bitcoin is closer to "digital copper" than "digital gold". The reasoning is bitcoin and copper act as "risk-on" inflationary hedges, while gold is "risk-off," he said.

"You look at the correlation between bitcoin and copper, or a measure of risk appetite and bitcoin, and we've got 10 years of trading history on bitcoin - it is definitely a risk-on asset," Currie said

Copper prices topped $10,000 a ton for the first time in a decade last month, as economic reopening triggered a rally in the metal. Demand has been surging as it's seen as a critical component to the transition to a green-energy economy. Although prices suffered a sharp decline towards the end of May, they again rebounded. Currie's comments came after a wild few weeks for cryptocurrencies.

Bitcoin suffered from a crypto sell-off after Tesla suspended bitcoin payments and China announced digital tokens can't be used for business. 

Currie said "There is good inflation and there is bad inflation. Good inflation is when demand pulls it, and that is what bitcoin hedges, that is what copper hedges, that is what oil hedges," Currie told CNBC. "Gold hedges bad inflation, where supply is being curtailed, which is focused on the shortages on chips, commodities and other types of input raw materials. And you would want to use gold as that hedge," he said.

Bitcoin suffered from a crypto sell-off after Tesla suspended bitcoin payments and China announced digital tokens can't be used for business. Chinese authorities have recently cautioned on crypto trading and Bitcoin mining efforts are being curtailed, which have put pressure on prices.  China regulations have been piecemeal, focusing on mining, new issuance, and retail influencers. 

Source: Bloomberg, CNBC

From The TradersCommunity Research Desk

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