BitDigest May 28 · Issue #667

• Crypto followers buy bitcoin in response to Goldman comments
• Goldman Sachs recommends clients refrain from investing in cryptocurrencies
• South Korea is looking to impose capital gains tax on crypto traders

Weekly Stock Review

• Canaan’s (NASDAQ: CAN) share price declined 30% for the second week in arrow. The company reported first quarter revenue of $9.6 million with a loss from operations of $10 million.
• Galaxy Digital Holdings (TSX: GLXY.V) will report its first quarter financial results tomorrow morning at 9AM EST. A live webcast will be available.
• The premium on the Grayscale Bitcoin Trust (OTCQX: GBTC) increased over 50% on the week to 21.3%. There are also new reports that Grayscale clients have increased purchases since the bitcoin halving with Grayscale now buying 150% of all newly minted bitcoin.

Thoughts on Goldman Sachs Client Call

At around. 8:30 yesterday morning, my phone started to buzz. It was a bit early to get so many emails, texts and notifications, but when I looked at my phone, the message was clear. Goldman had released the presentation in advance of their 10:30 update call, and the crypto community was not pleased.

To be fair, Goldman’s summary message was that they do expect the US dollar to be debased, and they were not recommending their clients add traditional gold or digital gold (bitcoin) on a “strategic or tactical basis.“This was clearly not what many of us had hoped for but what disappointed me was that the explanation Goldman provided was more reminiscent of the 2017-18 anti-crypto rhetoric I believed/hoped we had overcome, and their message failed to address the benefits the technology can apply to the global economic system.

Goldman began by explaining that bitcoin fails to meet the characteristics of a currency (medium of exchange, store of value, and unit of account), and then detailed why it was also not an asset class. While this argument was sound, I do not know why this opening statement was even necessary – whether bitcoin is a currency or an asset class really should have no standing on this whether it is a hedge or risk-on asset.

Unfortunately, this is where their presentation turned negative. Their remaining slides addressed the standard naysayers arguments questioning the scarcity of digital currencies, identifying that cryptocurrencies can be a conduit for illicit activities, and highlighting that crypto infrastructure is still young and susceptible to hacking or inadvertent loss and that its’ mania has dwarfed historical bubbles.

What surprised me the most was the statement that the infrastructure is young and susceptible to loss, as this exactly why many of Goldman’s clients are looking for them to enter the market. Although there have been numerous reports of theft over bitcoin’s eleven year history, the bitcoin blockchain has never been hacked, all of these incidents have occurred at third party custodians and exchanges; Goldman’s willingness to trade and custody digital assets for its clients would alleviate this concern.

The other big surprise, was that in arguing their case against digital currencies, Goldman failed to address the subject of a central bank digital currency. This is definitely a ‘top of mind’ topic and provides global recognition supporting the strength of this technical innovation.I did not actually expect that Goldman would make a bullish call on bitcoin, and I can appreciate their recommendation to their clients. I just wish Goldman had addressed bitcoin based on its core merits and had not based their positions on old headline media arguments.

The Headlines

Market Data

Exchange, Custody and Product News

Thoughts on the Ecosystem