Bitcoin Won't Dethrone Gold: Goldman Sachs

Bitcoin's recent rally to a new all-time high above $23,000 has drawn attention to the asset, as analysts and institutional investors increasingly liken Bitcoin to gold.

The latter doesn't need to fear for its safe haven status, however, according to Goldman Sachs Group.

As reported by Bloomberg, the investment bank said in a note that gold and Bitcoin can coexist, without Bitcoin taking the precious metal's throne.

"Gold’s recent underperformance versus real rates and the dollar has left some investors concerned that Bitcoin is replacing gold as the inflation hedge of choice," Goldman was quoted stating, adding that while an increased influx to Bitcoin can be observed, it does “not see Bitcoin’s rising popularity as an existential threat to gold’s status as the currency of last resort.”

Goldman specifically cited "transparency issues" and risk caused by "speculative retail investment" as a reason why institutions and wealth investors may avoid Bitcoin. “We do not see evidence that Bitcoin’s rally is cannibalizing gold’s bull market and believe the two can coexist.”

In recent months, Bitcoin has been attracting accelerated institutional interest, with its capabilities as a store of value and hedge against inflation often named as the main reason why large investors allocated funds to the asset. The developments have come hand in hand with increased comparisons to gold; the latest to refer to such similarities was Guggenheim Investments CIO Scott Minerd, who shared his outlook on Bitcoin on Bloomberg TV on Wednesday, stating that according to the firm's fundamental work, "Bitcoin should be worth about $400,000."

When asked for his reasoning behind the estimate, Minerd cited Bitcoin's scarcity and valuation relative to "things like gold."