Goldman Sachs Renews Hope in Crypto

Founded in New York City in 1869 by Marcus Goldman and his son-in-law Samuel Sachs, the duo could never have foreseen the financial titan coming to the rescue in digital currencies. This week, Goldman Sachs announced that it would be going on a shopping spree following the now legendary fall of FTX and market conditions. 

This type of move by a major institutional player is a great sign for everyone involved in the crypto markets. This action signals that there is still hope for crypto, despite the recent collapse of FTX and Luna earlier this year. 

In the face of financial ruin and seemingly no way out—Goldman Sachs is reminding everyone this week that there is still more to be done in crypto, particularly in the long term. 

Will this move by a major whale rally the markets, or will this be seen as yet another market manipulation by a seemingly “good player”?

Despite FTX’s Implosion, Goldman Sachs Sees Opportunity in Crypto

FTX’s implosion has heightened the need for more trustworthy, regulated cryptocurrency players, and big banks see an opportunity to pick up business, Mathew McDermott, Goldman’s head of digital assets, told Reuters. 

Goldman is doing due diligence on a number of different crypto firms, he added, without giving details. “We do see some really interesting opportunities, priced much more sensibly,” McDermott said in an interview last month. 

FTX filed for Chapter 11 bankruptcy protection in the United States on Nov. 11 after its dramatic collapse, sparking fears of contagion and amplifying calls for more crypto regulation.

“It’s definitely set the market back in terms of sentiment. There’s absolutely no doubt of that,” McDermott said. “FTX was a poster child in many parts of the ecosystem. But to reiterate, the underlying technology continues to perform.” 

While the amount Goldman may potentially invest is not large for the Wall Street giant, which earned $21.6 billion last year, its willingness to keep investing amid the sector shakeout shows it senses a long-term opportunity. 

Its CEO David Solomon told CNBC on Nov. 10, as the FTX drama was unfolding, that while he views cryptocurrencies as “highly speculative”, he sees much potential in the underlying technology as its infrastructure becomes more formalized. 

What Goldman Sachs’ Competitors Have to Say

Rivals are more skeptical.

“I don’t think it’s a fad or going away, but I can’t put an intrinsic value on it,” Morgan Stanley CEO James Gorman said at the Reuters NEXT conference on Dec. 1. 

HSBC CEO Noel Quinn, meanwhile, told a banking conference in London last week he has no plans to expand into crypto trading or investing for retail customers. 

Goldman has invested in 11 digital asset companies that provide services such as compliance, cryptocurrency data, and blockchain management. McDermott, who competes in triathlons in his spare time, joined Goldman in 2005 and rose to run the business of its digital assets after serving as head of cross-asset financing.

Have We Reached the Light at the End of the Tunnel?

Will we see a litany of other institutional investors join in on the crypto shopping spree? If the major move by Goldman Sachs is any indication of the general mood amongst investors—it looks like things might just work out after all. 

Be on the lookout for the tokens and coins that make the biggest leaps this crypto winter. They could be a major sign of projects deemed worthy by major institutional investors. 

Here’s to the light at the end of the crypto tunnel.