Market Monday: Goldman Sachs & Bitcoin

Who: Goldman Sachs analyst Sheba Jafari

What: Made a prediction that Bitcoin can hit $7,941.

When: Sunday 11/5/17

Why: Bitcoin has been gaining tons of public attention over the last couple years as the prices continue to skyrocket. Last week news came out that the Chicago Mercantile Exchange (CME) will include futures by the end of the year on bitcoin. A future is a legally binding contract to buy or sell a commodity or financial instrument.

My Thoughts

The fact that large financial institutions are acknowledging the digital currency shows that regardless of everyone’s opinion there is money to be made in the digital currency era. Goldman Sachs is known for finding money making opportunities and I am interested to see if they somehow get involved with the digital currency. It has been reported that they are exploring trading operations for the currency. My prediction is that those facilitating trading as the brokers will be the biggest beneficiaries. Most importantly they will keep their profits no matter where the price moves of the underlying coin.

Additionally, the move by the CME adds a level of credibility causing an increase in price last week. I personally will not be investing in Bitcoin. I think the early adopters are being minted millionaires and are “playing with the houses money” at this point. The volatility of Bitcoin is unpredictable which is why I think it is a big win for traders to be offered futures contracts for the maintenance margin feature requiring the losing side of the bet to add additional funds to maintain their position from movements in the market. However, I think that anyone who is in this market is purely speculating and I would not advise anyone to use more than they are willing to lose when “investing”.

Photo by Lorenzo Cafaro
What Are Your Thoughts?
  1. Do you own Bitcoin?
  2. Would you add Bitcoin to your portfolio?
  3. How well do you understand block chain and the mechanics behind Bitcoin?

Spread The Wealth!

16 Comments on “Market Monday: Goldman Sachs & Bitcoin”

  1. Thanks for the post. You’re correct, there has been a ton of press and comments on BitCoin. On your questions:

    1. Do you own Bitcoin? = No

    2. Would you add Bitcoin to your portfolio? = No

    3. How well do you understand block chain and the mechanics behind Bitcoin = Quite well. Block chain can be applied to any number of industries and/or initiatives. The concept of an open source, transparent ledger can be quite effective. The potential for decentralization and openness is certainly an advantage that can be beneficial for consideration. Outside of Bitcoin, a number of participants in and out of financial services are reviewing opportunities for block chain uses.

    1. Thanks for the input BD Mike! There is certainly proof of concept with block chain and I do think that it will be used in the future. I am with you on Bitcoin as an investment though I feel like it is pure speculation and hope those entering the market don’t get burned. I do wish I would of bought some back in college instead of wasting money on penny stocks though!

  2. 1. No
    2. No
    3. Zero knowledge, it confuses me!

    Someone I know said he made $1,000,000 in bitcoin. Someone else I know is developing something to ‘mine’ bitcoin. I don’t understand it at all and am staying away from cryptocurrency.

    1. At least you are willing to admit you don’t understand it at this point. I am sure there are plenty of people who are putting their money into it and have no idea how it all works.

  3. I do own Bitcoin, about $7.62 worth. I just started mining Bitcoin, and plan to tell all in a post series starting next week, but I can tell you one thing – the whole purpose of Bitcoin when Bitcoin first started was as a “fu government and hedgefunders” type of movement.

    The fact that Goldman Sachs is now picking up interest, what I have noticed has been increased fees, coin hungryness, greed – it’s like a person who has lost their sense of self.

    With that though – based on my personal experience – alternative coins and bitcoin will never truly take off until “regular folk” can reasonably get some, and use it for what they find purposeful in their everyday lives.

    1. When you mine bitcoin there is some overhead costs right? I have watched a couple documentaries on it and it is pretty interesting.

      Make sure to let me know when you start that post series I would like to learn more of the details.

      Thanks for sharing.

      1. The overhead costs for mining are the costs of the mining hardware (some miners can be several grand) and the electricity it costs to run the miner. You used to mine with a normal computer (well, you still can, but you won’t make anything), but that still made the computer use more electricity than normal, plus the cost of the computer.

        I’m currently mining with an older model of miner – if I remember right, I got the miner on eBay for $180 and a power supply for $100. The miner accounts for about half of my electricity usage every month. The power supply is a 500 watt power supply.

  4. I’ve seen a lot of press about bitcoin in the past few weeks – since Jaime Dimon, CEO of Chase, said that it was a fraud and anyone who buys it is stupid. His words, not mine. It will be interesting to see how these digital currencies perform in the next few years.

    1. It is always interesting when something like this breaks into the main stream media. I have a feeling it wont end well but who knows.

  5. $7,941 is an oddly specific number and Sunday, 11/5/17 is an oddly specific date for someone to predict the value of Bitcoin. Most predictions I’ve seen are round numbers: $2,000, $8,000… I’ve heard $10,000 by the end of the year. And John McAfee has infamously predicted bitcoin will reach $500k (https://www.cnbc.com/video/2017/09/13/john-mcafee-claims-bitcoin-is-headed-to-500k.html).

    As to your questions:

    1. Do you own Bitcoin? Yes. Probably too much, but I’m not Bitcoin-rich.
    2. Would you add Bitcoin to your portfolio? While I own a decent amount of Bitcoin, I don’t calculate it’s value into my net worth. It’s too volatile for that.
    3. How well do you understand block chain and the mechanics behind Bitcoin? I’m a software engineer with a BS in computer science and currently working on my master’s. I’ve looked into it and understand it fairly well. I wouldn’t’ve invested in it otherwise.

  6. Hey DM!

    Do you own Bitcoin? – No, but I do own Ether.

    Would you add Bitcoin to your portfolio? – No, but I’d add more Ether.

    How well do you understand block chain and the mechanics behind Bitcoin? – Pretty well, from a non-engineers’ perspective.

    I honestly don’t believe in Bitcoin that much, but I do believe in blockchain technology and Ethereum. I think smart contracts may be world-changing in the future, and so I’m investing a small amount that I can afford to lose on Ether. So far, I’ve got paper gains.

    We’ll see, but I’m excited!

SPEAK UP!