Goldman Sachs CEO Lloyd Blankfein says it's too soon for the bank to need a bitcoin plan
- Goldman Sachs CEO Lloyd Blankfein told Bloomberg Television it is too early for the firm to have a strategy for bitcoin.
- It has been reported that the firm was exploring a possible bitcoin trading operation.
Goldman Sachs CEO Lloyd Blankfein thinks its too early for the bank to need a strategy on bitcoin.
The banker told Bloomberg Television the cryptocurrency is too volatile for the bank to consider it as an urgent matter - at least for now.
"Something that moves up and down 20 percent in a day doesn't feel like a currency, doesn't feel like a store of value," Blankfein said.
Bitcoin is known for its spine-tingling volatility. On Wednesday it crashed by more than $1,000 after it blew past $11,000 per coin. UBS Wealth Management's Paul Donovan is another financier who thinks bitcoin's erratic nature disqualifies it as a currency, according to reporting by Business Insider's Will Martin.
"Bitcoin, in particular, has had, I think, three hyperinflation episodes this year," Donovan said. "That is to say its ability to purchase goods has dropped more than 25% in the course of a week. That is not a particularly stable store of value.
Already, three US exchanges have said they are preparing futures products for bitcoin, which would allow investors to bet on its future price. Bank of America Merrill Lynch said in a big report on cryptocurrencies that such products could potentially dampen volatility:
"Derivatives markets might play some role in reducing the volatility of cash markets. We would not overstate this, as a material reduction in volatility would require there to be a large community of speculators prepared to provide liquidity to the natural owners of the various coins, but given the volatility of the coin markets, maybe there already exists a cadre of participants who would look to short coins on strong days and vice versa, which could overall reduce volatility."
Read the full report on Bloomberg
Read more about blockchain, the technology powering bitcoin, here.