Is bitcoin the new gold? Goldman Sachs doesn't think so.
In a client note released Tuesday, the investment bank said that with the launch of the Cboe bitcoin futures contract, many investors have been asking if the cryptocurrency is taking demand away from gold.
"We believe the answer is no," Goldman Sachs said.
Cboe launched the bitcoin futures under the "XBT" ticker symbol on Sunday, with the first full day of trade on Monday.
Goldman outlined its reasons for why it sees a lack of substitution by investors from gold into bitcoin.
First, the investor pools are "vastly different" with those buying gold through various products are covered by anti-money laundering and counter-terrorist financing regulations, the investment bank said. But it's still unclear how cryptocurrencies could comply with such rules.
Secondly, there has been "no discernable outflow of gold" from exchange-traded funds (ETFs). An ETF is a financial product that tracks the price of an asset such as a commodity. Goldman said that ETF holdings had recently hit their highest level since mid-2013.
Finally, the analysts said that the "market characteristics of gold and cryptocurrencies are vastly different." Goldman said that bitcoin is attracting "more speculative inflows relative to gold."
"The net effect is that bitcoin has demonstrated much higher volatility and lower liquidity/price discovery compared to gold. The market cap of bitcoin is circa $275 billion versus gold at $8.3 trillion. Even all of the cryptocurrencies combined have a market cap less than $500 billion," the bank's note said.
"While the lack of liquidity and increased volatility may keep bitcoin interesting, it is unlikely to convince investors looking for the kind of diversification and hedging benefits which gold has proven to possess over its long history."
Many commentators have dubbed bitcoin "digital gold" because it has a finite supply and has at times seen price rises due to geopolitical tensions.
Goldman concluded in a separate note in October that bitcoin is not a good store of value versus gold.