The latest to issue a stern warning against the world’s largest digital currency is Goldman Sachs’s investment management division, which wrote that there is “no doubt” that the cryptocurrency’s astronomical rise over the past year “has pushed it into bubble territory.”
The firm added that bitcoin’s “meteoric rise in a short time has dwarfed the rise seen during the dot-com bubble.” They added: “We also believe that cryptocurrencies have moved beyond bubble levels in financial markets, and even beyond the levels seen during the Dutch ‘tulipmania’ between 1634 and early 1637.”
When Ether’s price move is compared against stocks, tulips, and bitcoin, the scale of the other rises essentially disappears in comparison, a fact Goldman called “astonishing.”
Courtesy Goldman Sachs
“While we do not know if bitcoin or any other cryptocurrency will double or triple from prevailing prices, we do not believe that these cryptocurrencies will retain their value in the long run in their current incarnation,” it wrote to clients.
Goldman recalled a quote by the Dutch historian Theodorus Schrevelius. After the tulip bubble burst, Schrevelius wrote that “our descendants doubtless will laugh at the human insanity of our Age, that in our times, the tulip flowers have been so revered.”
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
Courtesy Goldman Sachs
