Bitcoin’s 2021 Returns Destroy Everything on Wall Street, Goldman Sachs Says
Goldman Sachs, the storied Wall Street firm, didn’t start including bitcoin in its weekly ranking of global asset-class returns until late January, when the largest cryptocurrency quietly appeared atop the chart.
But since then, bitcoin (BTC, +5.54%)‘s lead over assets from stocks to bonds, oil, banks, gold and tech stocks and the euro has widened.
As of March 4, bitcoin’s year-to-date return, at about 70%, was roughly double that for the next-closest competitor, the energy sector, at about 35%, according to Goldman Sachs’s latest “US Weekly Kickstart” report.
The comparisons could become even more flattering to bitcoin now that a recent bout of selling in U.S. stocks has taken the Standard & Poor’s 500 Index’s year-to-date return to roughly zero – flat on the year.
- The recovery in oil prices and real yields has boosted year-to-date returns for cyclical sectors such as energy and financials, which are nevertheless underperforming bitcoin.
- Crude oil and energy have a higher risk-adjusted return (Sharpe ratio) than bitcoin so far this year.
- Gold is the worst performing asset class year-to-date, as rising yields have punished traditionally defensive sectors such as consumer staples and utilities.
- Based on prior CoinDesk reporting, bitcoin is viewed by many investors both in crypto and traditional markets as a potential inflation hedge, especially in an era where central banks around the world are pumping trillions of dollars of freshly created money into financial markets to stimulate coronavirus-racked economies. Even so, gold has lost about 10% on the year, prompting some market observers to argue that bitcoin is stealing market share from the yellow metal.
- According to a survey, some 40% of Goldman clients have exposure to cryptocurrencies.
- That’s the case even though, as recently as May 2020, Goldman’s money-management division argued in a presentation that cryptocurrencies were “not a suitable investments for our clients,” merely a beneficiary of a “mania” worse than the infamous run on Dutch tulips in the 1600s.
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