Goldman Sachs Says Crypto Drop Shouldn’t Impact US Spending

Despite cryptocurrency having one of its worse couple weeks in the history of digital assets, Goldman Sachs says that it shouldn’t impact US spending, and thus shouldn’t have a large impact on the economy as a whole. 

A group of Goldman Sachs researchers, led by Joseph Briggs, said that the crypto market’s recent decline shouldn’t affect US spending as “the recent decline is very small relative to US household net worth.” 

A group of the bank's researchers, led by Joseph Briggs, said that any impact of the crypto markets slide on US spending should be very small since "the recent decline is very small relative to US household net worth."

This research comes as Bitcoin is currently sitting at $28,903, which means the king of crypto is down almost 4% in the last 24 hours and 35% since the beginning of the year. In addition the recent death spiral of TerraUSD (UST) and LUNA has caused many investors to reevaluate their position on cryptocurrencies as a whole. 

Even treasury secretary Janet Yellen called for stablecoin legislation by the end of year in response to UST's catastrophic collapse. 

As of Friday, 16 of the top 20 cryptocurrencies by market cap are in the red with only the stablecoins staying in a very slight surplus. 

However, according to the investment firm’s researchers, cryptocurrency holdings as a percentage of net worth represent only 0.3% of US household net worth opposed to 29% for US equities. 

"While there is admittedly a lot of uncertainty around our assumptions—for example, it’s unclear whether the propensity to spend out of crypto holdings will ultimately be larger or smaller than for equities and other asset classes—our results strongly suggest that the crypto impact will be marginal relative to other factors."

Author: Tyler Irvin

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