Goldman Sachs: Bitcoin Bubble Is Bigger Than Dotcom Bubble

January 24, 2018

Goldman Sachs: Bitcoin Bubble Is Bigger Than Dotcom Bubble

One of the biggest investment banks in the world Goldman Sachs published a research letter to investors where it claims that Bitcoin bubble is actually bigger than the dotcom bubble and the tulip mania. Analysts warn customers about possible risks flagging increasing prices of BTC and ETH, as well as the rise of stock rates of companies related to blockchain technology

For instance, The Crypto Company stocks, which were launched on September 27, had grown rapidly by more than 17,000%, until on December 17 U.S. Securities and Exchange Commission (SEC) temporarily halted its trading. Analysts believe that this crypto mania is unjustified, since the most popular cryptocurrency in the world, bitcoin, has not fulfilled its role.

The report states:

"We think the concept of a digital currency that leverages blockchain technology is viable given the benefits it could provide: ease of execution globally, lower transaction costs, reduction of corruption since all transactions could be traced, safety of ownership, and so on. But bitcoin does not provide any of these key advantages."

Bitcoin transactions can be processed for up to 10 days, and the cost of 1 BTC may significantly vary depending on the exchange through which the transaction is conducted. Last year the gap between bitcoin prices on different exchanges sometimes was more than $4,000, and some users were forced to pay 31% more than the more lucky ones. In addition, transaction fees in Bitcoin network are relatively high. 

However, the bank is sure that despite all these facts and the growing volume of the cryptocurrency market, its potential negative impact is still very limited. In case of a burst, U.S. economy will not be affected, as well as economies of other countries, the report states. 

In December 2017 it was reported that the bank plans to launch its own cryptocurrency trading platform. 

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