A thread regarding today’s GS strategy call that discussed crypto, among other things.

1/ At a high level, it should come as no surprise that the bluest of blue blood legacy financial institutions is reluctant to embrace something whose very premise portends its own demise.

2/ More surprising to me was the uninspired analysis and the dismissal of the trading use case. It literally felt like they dusted off some old talking points and hit autoplay. Disappointing as I was hoping for a thoughtful counter.

3/ The illicit activity trope is the laziest argument of them all, especially coming from an institution whose own transgressions of the sort dwarf anything witnessed throughout the entire history of crypto.

4/ While remaining non-zero, the security risk highlighted has been meaningfully reduced in recent years and is now such a rarity that it barely merits mentioning.

5/ The comments regarding BTC forks as being dilutive showed their hand as either lazy or incompetent as it demonstrated a complete misunderstanding of the crypto market.

6/ Fully appreciate the lack of cash flows, unstable correlations (time frame dependent), & unproven ability to perform as an inflation hedge. But the volatility excuse rings false, especially since they disingenuously focus exclusively on the bad type rather than the good type.

7/ The comment about appreciation being dependent upon someone else being willing to pay a higher price quite literally describes every risk asset on the planet. Some real dissonance at play with this one.

8/ The bubble argument is cute given that there are bubbles everywhere today, some of which are surely being helped along by Goldman’s DCM desk and their former colleague, Secretary Mnuchin.

9/ Most surprising were the dismissive comments re: hedge funds using volatility as an invitation to trade. This from a bank whose very DNA is in trading, where it once achieved legendary status. Volcker appears to have completely neutered the firm of all risk appetite.

10/ Suppose we should remind ourselves that this was written for an IMD group whose business is to attract assets first, retain assets second, and perform on those assets third. Innovative thinking in most asset management businesses is more likely to be punished than rewarded.

11/ Many on CT are claiming victory since GS allocated a few mins to BTC on its call. “Surely this is a sign of much client interest!”. IMO it’s rather a sign of curiosity among a handful of clients who inquired following the PTJ letter, compelling GS to begrudgingly opine.

12/ GS is more motivated by profit than dogmatism. If there were real interest here, one can rest assured that GS would find a way to profit from it. Its dismissal should therefore be interpreted as genuine disinterest, for now at least.

13/ But not all hope is lost since: 1) Other parts of GS have made investments in the space already (Circle, Coinbase, Bitgo); & 2) It wouldn’t surprise me at all to see one part of GS talk down crypto publicly while another part conjures up a more concerted effort of its own.