Goldman Sachs: Cryptocurrency is the ‘internet bubble of late ’90s’

Most cryptocurrencies will crash to zero and are unlikely to see the peaks of 2017 again, the head of Goldman Sachs has warned.

Rather than casting doubt on cryptocurrency in general Steve Strongin, head of Goldman Sachs global investment research, is certain that it’ll be survival of the fittest.

He said: “People seem to be trading cryptocurrencies as though they’re all going to survive, or at least maintain their value. The high correlation between the different cryptocurrencies worries me. Contrary to what one would expect in a rational market, new currencies don’t seem to reduce the value of old currencies; they are seen to move as a single asset class.

Strongin compared the current interest in virtual coins to the internet bubble of the ’90s, of which few companies besides Google and Amazon have survived.

“If you believe this is a ‘few-winners take-most’ situation, then the potential for retirement depreciation should be taken into account,” Strongin continued. “And because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.

“Just because we are in a speculative bubble does not mean current prices can’t increase for a handful of survivors. At the same time, it probbably does mean that most, if not all, will never see their recent peaks again.”