Industry News Goldman Sachs Analysts believe in the Possibility of the Crypto Flippening

Goldman Sachs Analysts believe in the Possibility of the Crypto Flippening

May 25, 2021

During the previous ten days or so, prices in the crypto domain have crashed in a spectacular manner. Over 1.3 trillion USD in combined value across the cryptocurrency networks has been wiped from the markets. That includes not just bitcoin BTC token, but also all other motorized digital tokens. The value of the fall that the crypto ecosystem experienced is staggering and shows that the volatility in the markets is still there, despite the huge steps that the crypto made in the last year or so. Now, none of these steps showed themselves to be strong enough to stave away the slashing of prices. 

However, in the same turmoil, some positive facts are beginning to shine through stronger, along with the multitude of negative news. Among those is also the question of the validity of ETH token as a means of replacing its larger, older cousin BTC as the main cryptocurrency network. This once again returns the issue of the flippening to the table, but this time around, analysts from Goldman Sachs believe that the ETH network has a strong chance that this possibility really does come true.

Strong Losses Across the Board

In the terrible week of losses, The price of bitcoin fell by nearly 50%. This took place only a few weeks after the same digital currency hit its all-time high of over 64,000 USD. The same record values appeared back in April. Yet, the month of May clearly brought in a very different situation. A similar setup evolved with the ethereum token as well. Not long after the record values of the bitcoin talking, ETH  managed to reach well over 4,000 USD. It too saw its price slashed in half during the market crash.  There is no need to underline the fact that not many in the crypto community remained very optimistic about the ongoing bull run.

Also, showing the range of negative news that spurred on this development seemed like the most serious bearish information this year. These include the Elon Musk narrative about the energy consumption of the bitcoin network, but also the Chinese threats of a regulatory clampdown on the mining industry. The same country is essential in the sequence of cryptocurrency production and network support. If it were to actually make good on its threat and drastically reduce or limit the same industry, analysts are certain that the entire ecosystem of cryptocurrencies would enter a period of massive turmoil.      

Goldman Sachs Report Leak

In the same doom and gloom, it would be natural to expect not only further bad news but also no additional news that might consider imagining a different landscape of cryptocurrencies. As usual, a market crash in the crypto domain evokes only a dystopian vision of the near future in this industry. But, a leaked Goldman Sachs report shows that this financial giant and its analysts believe in a world where the ethereum network is the dominant structure in the field of blockchain cryptocurrencies. Presently the second-largest cryptocurrency has a market capitalization of some 250 billion USD.

Even in its fall from grace in terms of price, bitcoin’s market cap is set at 660 billion USD. Still, the Goldman Sachs report foresees a strong chance that ETH will overtake bitcoin nonetheless as the leading store of value in the crypto ecosystem. The report even has a catchy label associated with this idea. It stated that the ETH network is going to become the Amazon of information, which is a reference to the huge online retail company from Jeff Bezos. 

Storing of Value

The key element that Goldman Sachs envisions for the potential ascendance of the ETH is its ability to act as a store of value. While every cryptocurrency in the world is precisely this in some shape or form, the report mentions a range of key differences that ETH has working for it, as well as the entire cryptocurrency network of ethereum. Here, the DeFi platforms or decentralized finance applications are leading the way in terms of evolution and advancement of ethereum’s standing not just among other digital currencies, but also inside of the traditional financial ecosystem. DeFi platforms allow for the provision of things like loans and other financial instruments in a completely autonomous system that is decentralized in full. 

It has the potential to both recreate banking services and in many places replicate and replace them in full, especially if the traditional banks are not present or accessible in the same way they are in the developed nations. All of this is made possible thanks to the blockchain network that ethereum uses and its protocols that allow its ETH tokens to work in a very advanced and modular manner. The same makes the building block of future DeFi services as well. All of these played a big role in the surge of ETH that took place in 2020 but only reflected the same in terms of the token price a year later. But, the developments have not been unnoticed and now, a huge financial institution like Goldman Sachs believes it holds a strong promise of a different crypto future.

Competitive Edge

Bitcoin is still the one to beat in any form of public attention to the crypto domain. Like it often happens in the fields of mass media, esports, streaming services, and other sources of information in the modern world, being present is the first step towards being successful. Bitcoin is generating a huge amount of chatter almost regardless of the successes or drops in its price value. 

However, bitcoin has a key disadvantage to ethereum and it is the mechanics of its network. Ethereum is simply put more than a value token. The price of BTC token might climb further and faster than that of ETH, but it has the technological edge in comparison to bitcoin, even with things like the Lightning network. That means that regardless of price plunges – ongoing and future ones – the fundamental strengths of ETH remain in place. 

Source: Forbes