Archive for category: BITCOIN NEWS

Goldman Sachs Sees Huge Institutional Demand for Bitcoin — 76% of Clients Say BTC Price Could Reach $100K This Year

Global investment bank Goldman Sachs is seeing huge institutional demand for bitcoin with no signs of abating. A survey of Goldman’s institutional clients shows that 61% expect to increase their cryptocurrency holdings. Meanwhile, 76% say the price of bitcoin could reach $100,000 this year.

Goldman Sachs Sees No Signs of Institutional Demand for Bitcoin Abating

In a podcast published Friday, Mathew McDermott, head of Digital Assets for Goldman Sachs’ Global Markets Division, discusses the cryptocurrency trading environment for institutional investors.

He explained that his team conducted a cryptocurrency survey across the firm’s institutional client base, from “hedge funds, to asset managers, to macro funds, to banks, to corporate treasurers, insurance, and pension funds.” He clarified that “all of our institutional client discussion is really focused around bitcoin.”

His team received responses from 280 institutional clients and published the results of the survey this week. “What’s been particularly interesting,” according to McDermott, was that “40% of the clients currently have exposure to cryptocurrencies,” which he explained could be in any forms, from “physical through derivatives, through securities products, or other offerings in the market.” The executive revealed:

In terms of institutional demand, we have seen no signs of that abating … We see a huge amount of demand institutionally, [and] we’re also seeing that reflected in the private wealth management space as well.

He further described that “corporate treasurers, for example, they’re interested in two different aspects.” The first is whether they should be “investing in bitcoin on their balance sheet,” McDermott detailed, citing that “the key drivers from their perspective are negative rates … [and] just the general fears around asset devaluation.”

In addition, he said that they are also thinking “should we consider it as a payment mechanism? … particularly in the context of Tesla’s announcement.” Elon Musk’s electric car company, Telsa, said that it invested $1.5 billion in bitcoin in January and will soon be accepting the cryptocurrency as a means of payments for its products.

Out of the institutional clients that have crypto exposure, the survey shows that 41% own physical or spot crypto. McDermott emphasized:

61% of the clients expect their digital asset holdings to increase over the next year.

As for what’s stopping institutions from investing in cryptocurrencies, 34% of respondents believe that “regulation, internal investment, mandate permissions” are the greatest hurdles to start allocating to crypto assets. 24% believe that a lack of well-regulated, investable crypto assets is the greatest hurdle.

Most Goldman’s Institutional Clients Expect Bitcoin Price Could Reach $100K This Year

As for the future outlook of cryptocurrencies, 54% of respondents predict the price of BTC will be between $40,000 and $100,000 in 12 months while 22% predict it will be more than $100,000. This price level is not far-fetched as several fund managers are predicting the same, including Skybridge Capital and Mike Novogratz.

“In terms of the price action, I think it’s very difficult to predict bitcoin. It’s not an easy pastime,” McDermott opined, elaborating:

The survey was quite insightful in the sense that 76% agreed that the price by the end of the year would be between $40,000 and $100,000 … But, 22% were predicting over $100,000.

“I was on a similar survey with a private roundtable recently and the results there echoed something quite similar where 33% were predicting over $80,000 by the end of the year,” the Goldman executive further shared.

The global investment bank recently restarted its bitcoin trading desk. McDermott confirmed that the desk will begin handling bitcoin futures and non-deliverable forwards for clients. Goldman’s global head of commodities research, Jeff Currie, recently said that the bitcoin market “is beginning to become more mature,” calling the cryptocurrency “a retail inflation hedge.”

What do you think about Goldman Sachs’ view on bitcoin? Let us know in the comments section below.

Citigroup: Bitcoin Is at a Tipping Point, Could Become Preferred Currency for International Trade

Citigroup says bitcoin is at a tipping point and the cryptocurrency could become “the currency of choice for international trade.” The firm wrote in a report that “we could be at the start of massive transformation of cryptocurrency into the mainstream.”

Bitcoin Is at the Tipping Point, Citi Says

Citigroup’s Global Perspectives & Solutions (GPS) team released a 108-page report Monday entitled “Bitcoin At the Tipping Point.”

The Citi GPS report explains that “the biggest change with bitcoin is the shift from it being primarily a retail-focused endeavor to something that looks attractive for institutional investors.” The firm attributes the change to “Specific enhancements to exchanges, trading, data, and custody services” that are “increasing and being revamped to accommodate the requirements of institutional investors.”

Highlighting “the advantage of bitcoin in global payments, including its decentralized design, lack of foreign exchange exposure, fast (and potentially cheaper) money movements, secure payment channels, and traceability,” the report details:

These attributes combined with bitcoin’s global reach and neutrality could spur it to become the currency of choice for international trade.

The report also explains that bitcoin has seen three different stages of focus so far: technological oddity, censorship-resistant money, and digital gold. It further predicts that we will soon see a fourth stage of focus as bitcoin transitions to becoming an international trade currency. “This would take advantage of bitcoin’s decentralized and borderless design, its lack of foreign exchange exposure, its speed and cost advantage in moving money, the security of its payments, and its traceability,” the Citi report describes.

While pointing out a number of remarkable developments in bitcoin over the past seven years, the report outlines a few obstacles in the cryptocurrency’s way to becoming a globally-used “trade currency.” Among them are marketplace security — including tether’s role to bitcoin — the environmental impact of mining, and institutional concerns, such as capital lock-up, insurance, and custody limitations. The report adds:

There are a host of risks and obstacles that stand in the way of bitcoin progress. But weighing these potential hurdles against the opportunities leads to the conclusion that bitcoin is at a tipping point and we could be at the start of massive transformation of cryptocurrency into the mainstream.

“Bitcoin’s future is thus still uncertain,” the report additionally asserts, reiterating that “developments in the near term are likely to prove decisive as the currency balances at the tipping point of mainstream acceptance or a speculative implosion.”

Meanwhile, the report notes that “Large institutional investors and organizations are choosing to participate in and support bitcoin” while “Regulators are beginning to lay the groundwork for the asset to potentially enter the mainstream.”

It further emphasizes that this progression occurring “in just over a decade makes bitcoin remarkable regardless of its future,” concluding:

Bitcoin is at the tipping point of its existence and the path forward from here may have broad and widening repercussions.

What do you think about Citi’s view on bitcoin? Let us know in the comments section below.

US Banks Face a Massive Commercial Real Estate Crisis Looming on the Horizon

Financial incumbents may face a harsh reality soon, as a commercial real estate crisis has threatened the profits from America’s largest banks. A number of reports show that banks with a large amount of commercial real estate in their portfolios may see a significant fallout in the next few months.

Just recently PWC’s real estate practice published a report called “The 2021 Emerging Trends,” which shows city ranks have changed a great deal since the coronavirus outbreak. For instance, for a number of years, the city of Seattle was a top ten city for real-estate investment but after Covid-19, it dropped to No. 34 in terms of ratings with other American cities.

One of the biggest issues major cities like Seattle, Boston, New York, L.A., Atlanta, and many more cities face, is the mounting commercial real estate (CRE) losses looming on the horizon.

For instance, on November 11, 2020, columnist David J. Lynch published an article about how the current CRE market should frighten financial institutions like banks. The editorial explains how the Manhattan-based Signature Bank’s third-quarter earnings had shown “60 percent of its portfolio tied up in commercial real estate.”

Lynch further explains that lending funds to businesses like hotels, landlords, and local shops used to be something banks could count on but in cities like New York, these places are now a “ghost town.”

Signature Bank is suffering badly from the fallout, as Lynch further states:

The bank’s bad-loan write-offs, though still modest, are creeping higher. Despite years of steady profits, investors have punished the stock, which even after a recent rebound has lost 27 percent of its value this year.

Basically, commercial real estate or CRE is a type of property that is leveraged exclusively for business purposes. An extremely large portion of the world’s CRE is leased to those who generate an income but due to Covid-19 and the government’s response to the virus, some people leasing CRE cannot generate income.

The CRE crisis looming in the United States is happening in nearly every state of the nation. On November 16, 2020, Jdsupra published a report that covers Delaware and the horrible effects the response to Covid-19 has had on commercial real estate tenants and landlords.

“The real estate industry in Delaware experienced dramatic changes over the past eight months resulting from the Covid-19 pandemic— Without a regular income stream, many commercial tenants cannot meet their monthly rent obligations,” Jdsupra contributor John Newcomer, Jr writes. “Facing diminished monthly rental income, some landlords are left with a cash shortfall that affects their ability to make mortgage payments to their banks.”

Meanwhile, the Federal eviction ban enacted by the CDC will be lifted at the end of the year and skeptics think it could trigger a wake of delinquencies. Local authorities from hard-hit CRE markets like New York and California are trying to curb the fallout by adding further regulations.

For instance, California will continue to limit annual property tax increases for CRE markets. Moreover, analysts say no matter who is in office come January, no U.S. President will be able to affect returns on CRE. According to a recently published report from Cushman & Wakefield, real-estate downturns are guided by intense recessions no matter which political party is in charge of the United States.

“Rather than elections,” stressed the Cushman & Wakefield report, “the real estate cycle, the economy, interest rates, COVID-19, geopolitical events, and long-term growth drivers (like demographics and technological change) are the areas to focus on in determining leasing fundamentals and property values.”

Meanwhile, besides CRE and residential real estate, the investment assets gold and bitcoin have seen different price changes in recent days. For instance, after the Moderna vaccine announcement on Monday, spot gold prices dropped 0.40% and one ounce of fine gold is trading for $1,888 per unit. Gold also staggered in value when Pfizer announced a vaccine for Covid-19 as well, but crypto-asset markets have done the exact opposite.

For instance, after the Moderna vaccine announcement, bitcoin (BTC) touched a high of $16,850 on the exchange Bitstamp rising 5.6%. Ethereum prices jumped 3.39% on Monday touching a high of $464 during Monday’s afternoon trading sessions. The entire crypto market economy is still nearing a half of a trillion dollars at $464 billion which is up 2.6% on Monday.

What do you think about the looming commercial real estate crisis in the U.S.? Let us know what you think about this subject in the comments section below.

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American Economist Stephen Roach: 'U.S. Dollar in the Early Stages of Sharp Decent'

American economist and former chairman of Morgan Stanley Asia, Stephen Roach said on Sunday that he believes the U.S. dollar will “crash faster and harder.” Roach said similar statements during an interview back in June, and his latest commentary stresses that people should “expect the dollar to plunge by as much as 35 percent next year.”

Stephen Roach is a well known American economist as he worked as chairman of Morgan Stanley Asia and he also advised as the company’s chief economist as well. Roach currently serves as a senior fellow at Yale University and he’s been discussing the American economy regularly during the last few months. Last June, news.Bitcoin.com reported on Roach’s interview with CNBC when he explained a number of reasons as to why he predicts a “dollar crash.”

On Sunday, Roach published an editorial that bolsters his current opinion concerning a dollar crash and the economist emphasized that the USD has “entered the early stages of what looks to be a sharp descent.”

The economist noted that the U.S. dollar index has slumped by 4.3% after it benefited by 7% when there was a flight to cash in February. Despite what Roach calls a “modest correction” the former Morgan Stanley Asia chairman said, “the dollar remains the most overvalued major currency in the world.”

Roach expects the USD index to slide by as much as 35% in 2021 for a number of reasons.

“I continue to expect this broad dollar index to plunge by as much as 35 percent,” Roach says in a newly written editorial. “This reflects three considerations: the rapid deterioration in macroeconomic imbalances in the United States, the ascendancy of the euro and renminbi as alternatives, and the end of the aura of American exceptionalism that has given the dollar Teflon-like resilience for most of the post-World War II era,” he added.

Roach noted this past June in a prior opinion editorial that digital currencies like bitcoin and gold could possibly benefit from the massive dollar downturn. However, the two free-market assets may not see a significant boon from the major fiat adjustments, Roach highlighted at the time.

“Although cryptocurrencies and gold should benefit from dollar weakness, these markets are too small to absorb major adjustments in world foreign-exchange markets where daily turnover runs around $6.6 trillion,” Roach said.

The famed economist wrote on Sunday that it’s “no secret” what caused the unprecedented savings collapse in 2020. Moreover, the coronavirus outbreak “has been more than outweighed by a record expansion in the federal budget deficit.”

In Roach’s opinion, this is just the beginning of the USD’s deterioration, and “the savings plunge is only a hint of what lies ahead.”

“The vice is tightening on a still-overvalued dollar,” Roach concludes. “Domestic savings are plunging as never before, and the current-account balance is following suit. Don’t expect the Fed, focused more on supporting equity and bond markets than on leaning against inflation, to save the day. The dollar’s decline has only just begun.”

What do you think about Stephen Roach’s opinion about the dollar collapse? Let us know what you think in the comments section below.

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US Dollar Slump Incoming: Bank of America Sees 'Death Cross' as Confidence in Gold Rises

The US dollar is increasingly being viewed in a negative light by investors. Bank of America analysts are seeing a “death cross,” a bearish technical formation suggesting that a period of dollar weakness is coming. Meanwhile, confidence in gold has been rising.

Investors Losing Confidence in US Dollar

Investors are increasingly viewing the U.S. dollar in a negative light amid the resurging covid-19 pandemic and the prospect of improving growth abroad, such as in Europe.

Analysts at Bank of America Global Research explained on Wednesday that a decline in the dollar earlier this week has set off a bearish technical formation known as a “death cross” in the USD Index DXY. This occurs when the 50-day moving average crosses below the 200-day moving average. Reuters conveyed that according to the bank:

Past occurrences of the death cross have been followed by a period of dollar weakness eight out of nine times since 1980 when the 200-day moving average has been declining, as it is now.

Moreover, the dollar index fell 6% from its recent highs, the news outlet stated, adding that net bets against the dollar in futures markets are near their highest level since 2018. While the dollar has been seen as a safe haven for investors, its drop to two-week lows on Wednesday shows reduced safe-haven appeal, CNBC noted.

Some investors are also factoring into their dollar outlook criticism over the U.S. government’s response to the coronavirus crisis, protests over racial inequality, and President Donald Trump losing support months before the Nov. 3 presidential election. Analysts at TD Securities told Reuters that the dollar could also suffer if U.S. lawmakers fail to extend some stimulus programs for businesses and families that will soon expire. Recently, the firm cut its outlook for the dollar’s performance against a broad range of major currencies.

In contrast, some investors believe Europe could have greater success in containing the covid-19 pandemic, which could result in accelerated growth in the region. Shaun Osborne, chief FX strategist at Scotiabank, told the publication: “Clearly at this point, European Union countries have made more progress than … the U.S. — where economic trends are lagging noticeably.”

Meanwhile, confidence in global stock markets and gold is strengthening. Edward Moya, a New York-based senior market analyst at OANDA, said: “Investors are growing more confident that this stock market rally is not going to end any time soon … And that’s pretty much based on expectations that you’re going to continue to see a strong global stimulus response over the coming weeks and months.”

Analysts are also bullish on gold. On Wednesday, gold prices soared above the technical level of $1,800 per ounce for the first time since 2011, CNBC detailed, adding that “analysts say the metal’s rally is just getting started.” Besides gold, some investors have also expressed rising confidence in cryptocurrency, particularly bitcoin, such as Galaxy Digital CEO Mike Novogratz. However, gold prices retreated Thursday while the dollar rallied, coinciding with the Supreme Court ruling that a New York prosecutor can obtain Trump’s financial records.

Where do you think the US dollar is headed? Let us know in the comments section below.

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The aftermath of the coronavirus-provoked business shutdowns in the United States caused a number of market observers to focus on the U.S. real estate and rental markets. As the federal moratorium on evictions reaches its expiry, a recent Aspen Institute report reveals that 20 million renters or around 20% of 110 million American citizens who rent, will possibly face eviction by September.

Over a week ago, news.Bitcoin.com reported on the pending U.S. real estate crisis, as last month’s data had shown 4.3 million mortgage delinquencies, while commercial properties have also started to sink in value as well. American citizens, economists, and market analysts have been worried about the rental and mortgage sector ever since Covid-19 made its way to the United States.

Now the latest findings from the Aspen Institute’s recent report indicate that homeowners who rent are going to feel more pain in the coming months. The report estimates that roughly 20 million tenants could face evictions at the end of September, and the findings blame issues on the post-Covid-19 economy.

“20 million renters are at risk of eviction; policymakers must act now to mitigate widespread hardship,” explains the Aspen Institute’s authors Katherine Lucas Mckay, Zach Neumann, and Sam Gilman.

The U.S. has around 110 million renters nationwide, and the Aspen Institute’s numbers are dependent on factors like the unemployment rate, cost of living, and the average American’s savings.

Another reason for the possible displacement stems from the federal moratorium on evictions expiry, which banned evictions in certain types of housing units up until July 25. Some of the local government enforced moratorium measures on the county level have expired in June. Moreover, a number of economists and analysts believe that the evictions will start to disrupt the $16 trillion U.S. commercial real estate market.

A few of the stricter American states have begun opening certain types of businesses in phases, as New York for example recently entered Phase 2, which allowed a number of different businesses to begin operating again. Other strict states, specifically in the Northeast are entering Phase 3.

States like Massachusetts will not allow Phase 4, which includes businesses like nightclubs and bars, until at the very least therapeutic action or a vaccine is available according to Governor Baker. These nationwide job losses, broken up by state-enforced phases, will affect the economy and have a domino effect on landlords who rent to tenants in the United States.

“I think it’s going to be a hail storm out there,” Jeffrey Citron, from the law firm Davidoff Hutcher & Citron LLP said about the situation. “And I think, in most instances, it’s probably in the best interest of landlords to sit down and work with their tenants,” he added.

Despite the data from the Aspen Institute and the moratorium expirations, a number of real estate visionaries think ‘things will be fine,’ thanks to another round of government stimulus, otherwise known as the Paycheck Protection Program (PPP).

One particularly hard-hit real estate and rental market will likely be New York and last Sunday, the U.S. government revealed the names of certain businesses that benefited from PPP. Reports say “multiple New York City real estate companies have locked down funds from the Paycheck Protection Program.” The stimulus funding from the federal government ($650 billion nationwide) could help rental and real estate markets fend off disaster.

In the media, Covid-19 has been a great excuse for the federal government to print money on a whim, and many Americans still believe it will help the economy. The biggest weight on commercial, multi-family, and single-family real estate will be the unemployment rate, which will lead to nationwide evictions. While certain investments like gold and a myriad of cryptocurrencies have weathered the storm, many investors think that real estate is an extremely risky investment right now.

What’s worse is, even with the strict state-enforced phase restrictions, “Shark Tank” investor Kevin O’Leary says that U.S. businesses are using “the pandemic as a cloak.” Essentially, O’Leary stressed on Wednesday’s “Squawk Box,” American companies wanted to relieve these employees well before the Covid-19 outbreak.

“They wanted to do this anyway, and they’re doing it under the cloak of, ‘Gee, I can’t open so I’m just going to do it,’” O’Leary said. “Their jobs will never come back. This is great for earnings in the S&P. It’s not great for employment.”

What do you think about the U.S. housing and rental market going forward? Let us know what you think about this subject in the comments section below.

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Lebanon's Financial Meltdown: Currency Plunges 80%, Huge Losses at Central Bank, IMF Bailout Stalled

The financial crisis in Lebanon has seen its currency, the Lebanese pound, fall 80%. The International Monetary Fund (IMF) has estimated that the country’s central bank has accumulated losses as much as 170 trillion pounds. The disagreement between the Lebanese government and the central bank has stalled bailout discussions.

The economic and financial crisis in Lebanon has deepened as the local currency has been in a free-fall. The Lebanese pound sold at a rate of 8,000 to the U.S. dollar on Sunday at local exchanges, losing about 80% of its value over the past 10 months.

The IMF has warned Lebanon that its central bank, Banque du Liban, has accumulated losses of up to 170 trillion pounds, the Financial Times reported on Thursday. The publication explained that the central bank has used “a series of sovereign debt and currency swaps with local lenders … to shore up the banking sector, attract foreign currency and stabilize the Lebanese pound.” Citing people familiar with the matter, the publication reported that the IMF told the Lebanese finance minister and central bank governor:

That activity, combined with the impact of Lebanon’s default in March on the bank’s sovereign bond holdings and a collapse in the value of the currency, has resulted in accumulated losses of about L£170tn.

The losses equate to 91% of Lebanon’s total economic output in 2019 and are almost equal to the total value of the deposits held by the central bank from the country’s commercial banks, the news outlet conveyed. The pound had been pegged at 1,507.5 to the U.S. dollar since 1997.

An IMF spokesperson said last week, “Our estimates are broadly consistent with those in the government’s plan.” The central bank and some members of parliament, however, argued that the losses are substantially lower.

The disagreement between the Lebanese government and the central bank has put the prospect of obtaining much-needed emergency financing from the IMF at risk. IMF Managing Director Kristalina Georgieva said Friday that she did not “expect progress in the negotiations with the Lebanese officials.” Georgieva added: “IMF officials are still working with Lebanon, but it is not clear whether it is possible for the country’s leaders, active parties, and society to agree on implementing the reforms needed to stabilize the economy and boost economic growth.”

However, “Not accepting the diagnostic simply means that the IMF [will] walk away,” commented Henri Chaoul, a banker and former advisor to the government in the IMF talks. He resigned from his advisory role at the Ministry of Finance on June 17. Lebanon’s fiscal and monetary policy has come undone over the past six months, following weeks of anti-government protests.

What do you think about the crisis in Lebanon? Let us know in the comments section below.

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Fed Chair Warns of 'Unsustainable' Budget as US National Debt Crosses $26 Trillion

In his testimony before the Senate banking committee, Federal Reserve Chairman Jerome Powell warned Congress that the U.S. federal budget has been on an unsustainable path for years. He added that the U.S. economy is facing a deep downturn with “significant uncertainty.”

‘Unsustainable Path’

The Federal Reserve chairman testified before the Senate banking committee on Tuesday. While acknowledging that the federal spending is giving the economy a short-term boost during the coronavirus pandemic, he warned Congress that the U.S. economy faces a deep downturn with “significant uncertainty” about the timing and strength of a recovery.

“The levels of output and employment remain far below their pre-pandemic levels, and significant uncertainty remains about the timing and strength of the recovery,” Powell was quoted as saying. He suggested that investors should not overreact to surprisingly good economic data, such as the May retail sales report. The chairman elaborated:

The United States federal budget has been on an unsustainable path for years now … the debt is growing faster than the economy, so debt-to-GDP is rising. That is, by definition, unsustainable.

The Congressional Budget Office said that the U.S. deficit soared to $1.9 trillion for the first eight months of the fiscal year, and is expected to hit a record $3.7 trillion this year. The current record for a fiscal year deficit is $1.41 trillion; it was set in 2009.

“Every generation is entitled to spend what it wants to spend on the things it thinks it needs, but it really ought to pay for them, in some sense, rather than passing the bills onto the kids,” Powell continued. “Over time, future generations – our kids and our grandkids – their tax dollars will be going to servicing the debt that we incurred to buy the stuff we wanted when we were in charge.”

While emphasizing that the U.S. has a lot of borrowing capacity, he said: “we need to get back on a sustainable path.” He added that until the public is confident the [covid-19] disease has been contained, “a full recovery is unlikely.”

Congress has recently authorized approximately $3 trillion in spending to respond to the covid-19 pandemic, which includes the $2.2 trillion CARES Act President Trump signed into law in March. Meanwhile, the U.S. national debt also recently surpassed the $26 trillion mark.

What do you think about Jerome Powell’s warning? Let us know in the comments section below.

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