The media reported that Goldman Sachs has managed to achieve significant success in the sphere of cryptocurrencies.
The surge in prices for the mentioned virtual currencies, in the framework of which bitcoin rose to $73,794 last week, is associated with the actions of retail investors, but at the same time, institutional interest is showing growth. This was stated by Mathew McDermott, head of the digital assets unit of the mentioned global investment bank, last Tuesday, March 19, at the Digital Asset Summit (DAS) conference in London.
Goldman Sachs’ crypto trading desk started operating in 2021. This element of the functional structure of the global investment bank has witnessed significant changes in customer types and volumes.
According to analysts, the growth of the bitcoin exchange rate is associated with the launch of the American spot exchange-traded funds of the corresponding digital currency. Mathew McDermott says that the specified funds have triggered a psychological shift in the market. At the same time, he noted that the sphere of cryptocurrencies contains risks. Financial regulators often remind customers that many factors in the digital asset space can provoke the implementation of negative scenarios that mean losses for consumers in the virtual world with material consequences.
Mathew McDermott says that despite the potential for significant profits, cryptocurrencies are used on a limited scale in the real world. At the same time, in his opinion, the underlying technology, blockchain, is promising. Mathew McDermott predicts that over time, more and more asset classes will be tokenized and traded using blockchain. In his opinion, the corresponding trend will be realized within one or two years.
Last week, Goldman Sachs was one of several organizations that took part in a series of tests of the blockchain network connecting various financial institutions. As part of one of these pilot projects in the capital markets, participants made more than 350 simulated transactions on the blockchain for tokenized assets, fund registries, digital cash, repo, securities lending, and margin management.
Travis Hill, vice chairman of the Federal Deposit Insurance Corporation (FDIC), said last week that blockchain is full of promise. According to him, cryptocurrency and tokenization are already changing the process of asset ownership. Travis Hill called for regulatory clarity regarding next-generation technology, its use, and especially safety-related aspects. He also stated that applying the blockchain makes it possible to improve the way of transferring the value of deposits from commercial banks, government and corporate bonds, shares of money market funds, gold, and other commodities.
The price of cryptocurrencies has increased dramatically in 2020 and 2021. In those years, ultra-low interest rates contributed to the growth of speculative investments. Cryptocurrencies reached their peak during the coronavirus pandemic. In 2022, a sharp downturn began in the digital currency sector. In the mentioned year, there was a series of bankruptcies and failures in the largest crypto companies, including FTX. This process has deprived the crypto market of $2 trillion. Moreover, millions of investors have lost their funds.
As we have reported earlier, JPMorgan Predicts Bitcoin Correction.
