Bitcoin is soaring this year. Goldman’s crypto skeptic isn’t biting.

Sharmin Mossavar-Rahmani is chief investment officer of Goldman Sachs Wealth Management. (Photo: Justin J Wee for The Wall Street Journal)
Sharmin Mossavar-Rahmani is chief investment officer of Goldman Sachs Wealth Management. (Photo: Justin J Wee for The Wall Street Journal)

Summary

Sharmin Mossavar-Rahmani is known for her blunt opinions and bitcoin skepticism.

A crypto enthusiast approached Sharmin Mossavar-Rahmani a couple of years ago, asking why she was so negative about digital currencies.

Mossavar-Rahmani was accustomed to defending her stance. As the chief investment officer of Goldman Sachs Wealth Management for the past 23 years, she has guided thousands of wealth advisers, clients and traders and regularly appears on television.

This time, she was being questioned by a Goldman Sachs intern who said she owned cryptocurrencies. Mossavar-Rahmani dismissed investing in crypto as nothing more than a means of speculation.

“Have you thought about what it’s worth?" Mossavar-Rahmani recalled asking in that summer of 2022. “Have you thought about at what point you’ll get out?"

The intern didn’t give much of an answer. She also didn’t seem eager to sell her crypto.

So it goes for Mossavar-Rahmani, a high-profile market prognosticator who has gotten a lot right over the past few years. Since the 2008 global financial crisis, she ​has urged clients to stay fully invested in U.S. stocks and ​minimize their exposure to China and other emerging-market countries, advice that has made investors money amid the market’s climb since that perilous period.

When it comes to crypto, Mossavar-Rahmani remains skeptical, even as bitcoin has soared 64% this year to nearly $70,000. Her position puts her at risk of costing Goldman clients potential gains while appearing out of step with markets. Wall Street giants including BlackRock and Fidelity have embraced bitcoin, launching funds in January that make it easy for everyday investors to invest in it.

Some financial advisers have also begun advising clients to include crypto in their portfolios.

Mossavar-Rahmani couldn’t care less what the others do.

“We do not think it is an investment asset class," she said in an interview, comparing the recent crypto enthusiasm to the tulip mania of the 1600s. “We’re not believers in crypto."

She says clients are well aware of her team’s crypto criticisms and haven’t asked about jumping in.

Mossavar-Rahmani’s view is based on the fact that it is nearly impossible to accurately value cryptocurrencies, which don’t produce earnings, cash flow or dividends.

“If you cannot assign a value, then how can you be bullish or bearish?" she asks, rhetorically.

Mossavar-Rahmani’s personal background also influences her perspective. The daughter of an Iranian diplomat, she completed her high-school education in Iran before leaving for the West in 1976, two years before the country’s revolution began. She attended Princeton University, majoring in economics and graduating in 1980.

As an immigrant, she says she has a unique appreciation for democracy and the rule of law. Some have turned to crypto, at least in part, because they view central banks and the government as flawed. They say those institutions have made costly mistakes, such as keeping monetary policy loose ahead of the 2008 financial crisis, raising questions about the dollar and other fiat currencies.

By contrast, Mossavar-Rahmani thinks U.S. government policymakers play beneficial roles in society, despite their miscues. Another reason she cites for steering clear of cryptocurrencies: the crimes they facilitate.

“The rule of law and systems of checks and balances matter," she says.

Mossavar-Rahmani joined Goldman in 1993, becoming the first woman to join as a partner. Hired by Jon Corzine, the former New Jersey governor who at the time was a Goldman senior executive, she is the firm’s second-longest tenured partner.

Around the office, she is known for sharing blunt opinions.

“She has no filter, she tells you exactly what she’s thinking," says Michael Swell, a former Goldman partner and fixed-income executive who worked closely with her. “When Sharmin speaks, people listen."

In June 2021, Mossavar-Rahmani and her colleagues published a critique of crypto titled, “Digital Assets: Beauty is Not in the Eye of the Beholder." The 50-page piece argued that bitcoin is too volatile to be a reliable medium of exchange and that it is “unlikely that it will be used broadly."

The observations have held up—but bitcoin’s price has more than doubled since then.

Mossavar-Rahmani says she isn’t feeling pressure to alter her views. In fact, she is as skeptical as ever on bitcoin, which she says “creates absolutely no value in any shape or form."

What’s more, she says crypto bulls “all proclaim democratization of finance, yet the main decisions end up being driven by a few controlling people."

Plenty of people disagree with her conclusions. Matt Hougan, chief investment officer of crypto asset manager Bitwise, argues that just because an investment doesn’t have cash flow, doesn’t mean it doesn’t have value.

“Bitcoin had no cash flow 10 years ago and yet it’s up 15,000%," Hougan says, adding that it has done well in periods of high and low inflation, as well as rising and falling interest rates. “The world is full of things that produce no cash flow but have value," he says, pointing to gold, art and collectibles.

Bitcoin also offers a service, Hougan says: “The ability to securely store wealth without relying on a centralized institution."

Mossavar-Rahmani and her colleagues acknowledge the potential benefits of converting assets like real estate into digital tokens, and say central-bank digital currencies could eventually be useful. Mossavar-Rahmani acknowledges that gold, too, doesn’t produce earnings and is hard to value, yet has been historically popular as an investment and for jewelry. That isn’t enough of a reason to own crypto, though, she says.

“At least you can hold onto physical gold and store it; you can’t do that with crypto," she says. “And anyway, we don’t encourage people to own gold."

Write to Gregory Zuckerman at Gregory.Zuckerman@wsj.com

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