Posted on

‘The Drug Is Gone’: Mike Novogratz Compares Current Bitcoin Markets to ‘Methadone Clinic’

Mike Novogratz has said that the ICO market is “dead right now” during an interview on the current state of the crypto industry.

Mike Novogratz compared current cryptocurrency  market performance to a “methadone clinic” in an interview with Bloomberg Dec. 11.

During the interview, Bloomberg asked Novogratz how coming from Wall Street made him different from most of the cryptocurrency community, which seem to treat cryptocurrency “almost like a religion.” Novogratz answered that, while he believes in the underlying technology, “when prices get stupid,” he sells.

Novogratz also characterized Bitcoin’s (BTC) enormous growth in late 2017 –– which peaked at $20,000 per coin –– “a drug.” He called the period a “speculative mania,” adding that the “audience is more sober now — the drug is gone.”

According to the hedge fund manager, the current market is characterized by “pessimism” and “fear,” with people expecting the leading cryptocurrency will go “to zero.” Novogratz, however, remains confident, concluding:

“But it’s not going to zero. We’re at the methadone clinic.”

During the interview, the former Goldman Sachs partner and hedge fund manager admitted that he thought Bitcoin “was going to hold at $6,200 […] but then Bitcoin Cash decided to fork again.” The idea that the contentious Bitcoin Cash hard fork has been a major factor that instigated the current sell-off is widespread among analysts.

Further explaining market fear and uncertainty that could have led to the most recent sell-off, Novogratz told Bloomberg:

“At the same time [as the BCH hard fork] the SEC came out and sanctioned a few ICOs and said, ‘Oh, by the way, your investors can sue for damages.’ That scared the heck out of a lot of people.”

When asked if Initial Coin Offerings (ICO) will “ever come back,” Novogratz stated that “the ICO market is pretty much dead right now.” He added however that “the SEC doesn’t want to kill this innovation” and that he expects a market for regulated security tokens in the United States.

He explained that security tokens “aren’t things that go from $1 to $1,000” but instead they are “things that yield 14 percent” that will be sold to qualified buyers. He concluded, “that sounds a heck of a lot less sexy, but you’re going to see that business grow.”

The Galaxy Digital founder also reiterated the popular idea that “Bitcoin is going to be digital gold, explaining:

“That means [Bitcoin is] the only one of the coins out there that gets to be a legal pyramid scheme. Just like gold is. All the gold ever mined in the history of the world fits in an Olympic-size swimming pool. You’re out of your mind to think that pool’s worth $8 trillion. But it is because we say it is.”

As Cointelegraph reported last month, Galaxy Digital lost $136 million in the first three quarters of this year, but Novogratz remains confident that crypto will “flip next year.”

Last week, U.S. Securities and Exchange Commission (SEC) Chairman Jay Clayton said that ICOs “can be effective” but that “securities law must be followed.”

Posted on

Scattered Gains Bring Respite after Midweek Crash, But Many Alts Continue to See Losses

Crypto markets have slightly stabilized today, although many major coins continue to shed value.

Friday, September 7: after the midweek bloodbath, crypto markets have slightly stabilized today, although many coins continue to shed value, as Coin360 data shows.

Market visualization from Coin360

Market visualization from Coin360

Bitcoin (BTC) is trading at around $6,430 at press time, down just under one percent on the day, according to Cointelegraph’s Bitcoin Price Index.

Despite a bullish start to September, Bitcoin’s price decline set in this Wednesday, September 5. Since then, the leading cryptocurrency has spiralled downwards from a high of $7,391 to over $1,000 less at its intraday low today at $6,354.

The coin is now a stark 16 percent down on its weekly chart. On the month, Bitcoin nonetheless remains up by around 7.3 percent.

Bitcoin’s 7-day price chart

Bitcoin’s 7-day price chart. Source: Cointelegraph’s Bitcoin Price Index

Ethereum (ETH) has tumbled to around $216 at press time, losing just over 3 percent on the day. As with Bitcoin, Ethereum started September strong, briefly brushing the $300 price point September 1 before this week’s price plummet.

On its weekly chart, Ethereum is down just over 23 percent, with monthly losses around 46 percent.

Ethereum’s 7-day price chart

Ethereum’s 7-day price chart. Source: Cointelegraph’s Ethereum Price Index

Among the other top ten coins on CoinMarketCap, only three are in the green, though losses are capped below 3 percent. After Ethereum, Bitcoin Cash (BCH) is down the most, seeing 2.77 percent losses on the day to trade at just under $500.  

Stellar (XLM) is the only top ten crypto to see solid growth, up 4 percent on the day to trade at around $0.207. While it still remains shy of its intraweek high at almost $0.24, XLM-BTC has seen a solid bounce back to its trading levels before the mid-week market plunge set in September 5.

Stellar’s 7-day price chart

Stellar’s 7-day price chart from CoinMarketCap

Among the top twenty coins, all assets, except for two exceptions, are seeing mixed reds and greens in the 1 percent range, showing the coins are holding steady over the past 24 hours to press time.  

Dash (DASH), ranked 12th by market cap, has soared almost 6.46 percent on the day to trade around $185.56, although it is still trading almost 16 percent lower than its value ($220.50) during early trading hours September 5.

Dash’s 7-day price chart from CoinMarketCap

The other exception among top twenty coins is Dogecoin (DOGE), ranked 20th, which is up around 6 percent on the day, capping a week of extraordinary price volatility.

Dogecoin’s 7-day price chart from CoinMarketCap

Total market capitalization of all cryptocurrencies is around $203.5 billion at press time, down over $35 billion from its intraweek high of around $240 billion.

7-day chart of the total market capitalization of all cryptocurrencies

7-day chart of the total market capitalization of all cryptocurrencies from CoinMarketCap

Even as the markets tumble, fresh data from management and technology consulting firm GreySpark has found that volumes on crypto marketplaces have burgeoned in 2018, with the U.S. dollar the most actively traded fiat against cryptocurrencies.

Responding to this week’s grim market movements, crypto Twitter has actively mulled the possible impact and price correlation surrounding reports that Goldman Sachs was rolling back their plans to open a crypto trading desk. The banking giant’s CFO refuted the rumors in a statement September 6, calling them “fake news” and affirming the company’s plans were on track.

Posted on

Why Bitcoin Dropped by Over 10 Percent, Deleting $40 Billion From Crypto Market, Experts Explain

Four experts speak to Cointelegraph about the 13 percent drop of Bitcoin, evaluating market slump.

Over the past two days, the valuation of the cryptocurrency market has plunged to $201 billion as Bitcoin lost 13 percent, moving closer to its yearly low at $192 billion.

Since Sept. 6 when the price of Bitcoin dropped by more than 10 percent within a one-hour period, the cryptocurrency market has been on a continuous decline. Tokens bled out more intensely than they previously did in April and June, losing out 10 to 30 percent against Bitcoin.

Source: coin360.io

Cointelegraph interviewed ThinkMarkets chief market analyst and former Bank of America trader Naeem Aslam, eToro senior market analyst Mati Greenspan, and well recognized cryptocurrency technical analyst Uzi, delving into the recent drop of Bitcoin and the rest of the cryptocurrency market.

$40 billion drop: One of the biggest daily decline in recent years

On Sept. 6, the cryptocurrency market lost nearly $40 billion from its valuation in less than 24 hours, demonstrating one of the steepest declines in the past three years.

Source: CoinMarketCap.com

In mid August, the cryptocurrency market dropped to its yearly low at $192 billion, but it took seven days from Aug. 7 to Aug. 14 to record such a large drop in valuation.

Prior to Wednesday, throughout the month of August, Bitcoin showed its highest level of stability since June of 2017, as researchers at Diar noted. From Aug. 8 to Aug. 26, the price of Bitcoin remained relatively stable in the $6,000 region, before initiating an overdue corrective rally above the $7,000 resistance level.

Source: CoinMarketCap.com

But, a rushed rally from the $7,000 mark to $7,400 within a four day period led sell pressure to build up, allowing bears in the cryptocurrency exchange market to take over, leading Bitcoin to fall by a large margin.

In late August, ShapeShift CEO Erik Voorhees said that the bear market is not over yet, but the low price range of major cryptocurrencies present a viable opportunity for new investors to come into the market.

The daily chart of Bitcoin demonstrates four similar movements since February. In the past six months, Bitcoin has risen to $10,000, fell to $6,000, recovered to $10,000, and tested the $6,000 resistance level on four occasions.

In February, Bitcoin surged to $11,000 but fell back down to $6,000. In April, Bitcoin rose to $10,000 and dropped to $6,000. In July, Bitcoin rallied to $8,500, only to test the $6,000 resistance level a month later. In September, the same pattern occurs, with each peak on the upside eventually declining $6,000.

Caption: One-day Bitcoin price chart from Cryptowat.ch

If Bitcoin recovers from the $6,000 support level, the next short-term rally could send Bitcoin to $7,000, which may fall back to the $6,000 region. But, if the dominant cryptocurrency can successfully bottom out in the $6,000 region, a possibility for a proper mid-term rally with newly found momentum could emerge.

Factors behind the drop

Speaking to Cointelegraph, ThinkMarkets chief market analyst Naeem Aslam said that speculators have unnecessarily intensified the downtrend of Bitcoin by overselling Bitcoin in the global exchange market.

Aslam emphasized that the downward trend of Bitcoin has not changed since December of 2017, when the cryptocurrency market achieved a $900 billion valuation and initiated a rapid decline:

“Speculators have gone crazy and they are trying to squeeze as much blood out of this trade as they can. Bitcoin hasn’t changed what it was since last December, so what is the panic?”

Aslam added that it is difficult to pinpoint specific factors that have led the price of Bitcoin to drop substantially in recent months.

Analysts and investors in the cryptocurrency market and the broader financial market often attempt to find correlation in cryptocurrency price movements to developments in the cryptocurrency and blockchain sector.

However, correlation is not equivalent to causation, and because an event occurs at a certain time in which cryptocurrency prices fall or surge by a large margin, it does not necessarily mean that the event triggered a big movement in the cryptocurrency market.

TABB Group, an international research company, reported in July that the over-the-counter (OTC) Bitcoin is at least two to three times larger than the cryptocurrency exchange market.

Under the assumption that the OTC market is in fact two to three times bigger than the exchange market of crypto, developments in the cryptocurrency sector should have minimal impact on the price movements of cryptocurrencies — at least in the short-term — as the exchange market depends on the larger OTC market.

Reports have suggested that the correction of Bitcoin initiated on Wednesday was mainly caused by the delay in the decision of Goldman Sachs to launch a Bitcoin trading desk.

It is far-fetching to claim that the decision of a major investment bank to pivot from offering Bitcoin trading services — which may not appeal to its consumer base of institutions and large-scale corporations — to cryptocurrency custodian services led the price of Bitcoin to plunge within an hour.

Rather, it is more likely that the continuous build up of sell pressure on Bitcoin and other major cryptocurrencies since December of 2017 created instability and volatility in the market, causing the valuation of the market to drop.

Because the volume of Bitcoin remains relatively low in comparison to traditional assets and stores of value like gold, it is easier to trigger a domino effect across leading cryptocurrency exchanges.

Goldman Sachs delaying Bitcoin trading desk not relevant

On Sept. 6, Cointelegraph reported that Goldman Sachs has delayed the formal launch of its Bitcoin trading desk that is structured to facilitate rising demand from retail traders and individual investors.

Goldman Sachs spokesperson Michael DuVally told Reuters that the bank has not been able to reach consensus on the roadmap of its digital asset venture, citing various regulatory issues that currently exist in United States markets.

Hours after the statement of DuVally was released, Martin Chavez, the chief financial officer at Goldman Sachs, personally refuted reports that the institution is pivoting away from forming a Bitcoin trading desk operation, characterizing reports around it as “fake news.”

Aslam stated that it is premature to attribute the market’s struggle throughout this week to the delay in the launch of the Bitcoin trading desk operation by Goldman Sachs, as the bank has not closed its operation but merely delayed it to focus on a more urgent initiative that is cryptocurrency custodianship:

“Goldman has only delayed the process, they still have invested a lot of money and talent in this area. Investors must know it is very normal for banks to delay the IPO process if the market conditions are not favorable and over here we are talking about starting something completely new. Goldman has its fingers in many of the areas when it comes to Bitcoin, so stop thinking about it and focus on the price.”

Currently, the cryptocurrency market has a wide range of regulated exchanges in the likes of Coinbase, Gemini, and UPbit that can be used by retail traders to invest in the cryptocurrency market. However, it lacks trusted custodianship and solutions that can break the barrier between cryptocurrencies and institutions.

It can be argued that Goldman Sachs is working on a more urgent issue that needs to be addressed in order to convince the broader financial market and governments to acknowledge cryptocurrencies as an emerging asset class.

As such, while the Goldman Sachs announcement contributed to the fall of the market, as cryptocurrency technical analyst Uzi told Cointelegraph, it is difficult to acknowledge Goldman Sachs as the sole cause for the correction. Bitcoin was already facing resistance around $7,400, the peak it achieved last week before sliding downwards:

“I feel the Goldman Sachs news about them rolling back plans on their crypto trading desk definitely helped trigger the Bitcoin drop, we were facing some tough resistance around $7,400 as well, but it’s not the biggest secret in the world that a massive amount of BTC shorts was added on Bitfinex days before this drop. 10K BTC in shorts, I believe — follow the money, as they say.”

Same bear trend since February

Mati Greenspan, a senior analyst at eToro, one of the largest multi-asset trading platforms in the global finance sector, with eight million active users, echoed the sentiment of Aslam by stating that the cryptocurrency market has been in a similar trend over the last few months, unable to break out of the $8,000 resistance level with solid volume and momentum:

“Volatility in the crypto markets has picked up over the last few days but is still pretty normal for this market. As far as Bitcoin’s price is concerned, the price has been in a rather stable range between $5,000 and $8,000 for the last few months and this hasn’t changed.”

Greenspan added that the volatility in the market can be attributed to the lack of demand from traders in the cryptocurrency sector, rather than specific events which analysts have pinpointed as the primary cause of the recent correction.

“Several possible reasons for the drop could be a few bad rumors that are circulating in the press, along with a stronger dollar and weakness in tech stocks. Ultimately though, it’s simply a matter of more supply and less demand in short-term trading.”

Technical analyst says Bitcoin market is illiquid, fake volumes

Bitcoin is not considered a sufficiently liquid market, especially considering the fact that its exchange market is open to any individual investor and retail trader in the global market. While cryptocurrency market data providers estimate the daily volume of Bitcoin to be around $5 billion, studies have shown that most major cryptocurrency exchanges inflate their volumes through wash trading.

Alex Kruger, an economist and a cryptocurrency trader, stated earlier this week that Bithumb, South Korea’s second largest cryptocurrency exchange behind Kakao-run UPbit, said that more than $250 million worth of fake volume was created since Aug. 25.

He explained that one group of traders has been taking advantage of Bithumb’s 120 percent trading fee payback, which can generate about $90,000 in net income, with a $250 million daily trading volume.

“There currently are $250 million [in] fake volume traded at [the] Korean crypto exchange Bithumb, every day at 11 a.m. Korean Time, since Aug. 25. Bithumb offers 120 percent payback of trading fees as an airdrop. Trading fees are 0.15 percent taker. To collect the full KRW 1 billion rebate, a wash trader must thus trade KRW 278 billion. That is $250 million in daily fake volume. Notice how 31K Bitcoin are traded at exactly 11 a.m.”

Directly or indirectly, the method utilized by Bithumb has incentivized wash trading that bumps up the daily trading volume of the cryptocurrency exchange. The end outcome is a daily net income of $90,000 for a group of traders and a significant increase in the daily trading volume of Bithumb.

However, while the method leads to a win-win situation for both parties, it affects the global cryptocurrency exchange market in a negative way — as it reduces the authenticity of the international trading volume of cryptocurrencies.

Uzi stated that liquidity and fake volumes are two problems that cryptocurrency exchanges will have to address urgently, to ensure that investors in the market are protected and governments can recognize the sector as a legitimate industry:

“Solving the liquidity issue is one that needs to be tackled, and the issue of fake volume is something that needs to be addressed on a larger scale, because there are definitely questionable volumes on major exchanges.”

Uzi also noted that the Bitcoin market is still generally illiquid, given the lack of activity from institutions and large-scale hedge funds in the sector. He stated that the market is still not ready to support big demand from institutional investors, and most short or long contracts around Bitcoin filed through the U.S. futures market or cryptocurrency exchanges are done by individual investors.

“I have always felt the market for Bitcoin is still illiquid, and especially if you look at the altcoins market. I don’t feel any professional institution would take up a short position at that time on Bitcoin just out of the sheer volatility and the momentum it had testing a decent resistance, as well as the massive short being opened that was noticeable to most, it would be terrible risk management.”

Where the market goes next with Coinbase ETF variable

As Cointelegraph reported on Sept. 7, the world’s largest asset manager BlackRock, which oversees $6.317 trillion in assets, and Coinbase, the cryptocurrency sector’s biggest exchange and brokerage, are in talks to develop a cryptocurrency-based exchange-traded fund (ETF) to bolster market activity and facilitate growing demand from institutions for cryptocurrencies.

The entrance of VanEck and the Chicago Board Options Exchange (CBOE) has already increased the probability of the approval of the first Bitcoin ETF by the U.S. Securities and Exchange Commission (SEC). The involvement of BlackRock will create more competition in the Bitcoin ETF space among U.S.-based regulated financial institutions, which may lead to more contenders filing with the SEC to improve the liquidity of the dominant cryptocurrency.

Variables like Bakkt, the Coinbase-BlackRock ETF and positive regulation-related developments in Japan and South Korea could contribute to the recovery of the cryptocurrency in the short-term, which previous corrections in 2012, 2014, and 2016 did not have.

Experts generally agree that the correction of the cryptocurrency market on Sept. 6 was caused by increasing sell pressure and a culmination of various developments, rather than a single event like the Goldman Sachs Bitcoin trading desk announcement having an immense impact on a global market.

Posted on

Goldman Sachs CFO: Recent Reports About Crypto Trading Desk Are ‘Fake News’

Goldman Sachs CFO Martin Chavez called recent reports of the firm abandoning a crypto trading desk “fake news.”

Goldman Sachs Chief Financial Officer (CFO) Martin Chavez said that recent reports about the company abandoning its plans to open a cryptocurrency trading desk are “fake news,” CNBC reported September 6.

At the TechCrunch Disrupt Conference in San Francisco, Chavez reportedly said that reports about the company’s intentions for a crypto trading desk were unfounded:

“I never thought I would hear myself use this term but I really have to describe that news as fake news.”

Rumors that Goldman Sachs planned to establish a crypto-focused unit by the end of 2018 were initially reported by Bloomberg in December last year. However, on September 5, Business Insider reported that unnamed sources said the firm is scrapping crypto trading desk plans due to an unclear regulatory environment in the crypto industry. Chavez suggested that the excitement over a potential trading desk may have been premature. CNBC quotes him saying:

“When we talked about exploring digital assets […] it was going to be exploration that would be evolving over time. Maybe someone who was thinking about our activities here got very excited that we would be making markets as principal and physical Bitcoin, and as they got into it they realized part of the evolution but its not here yet.”

While Goldman has been clearing and providing liquidity for Bitcoin-linked futures contracts from the CBOE and CME, Chavez said there needs to be a reliable custody solution before the bank can proceed with physical Bitcoin (BTC). He stated:

“Physical bitcoin is something tremendously interesting, and tremendously challenging. From the perspective of custody, we don’t yet see an institutional-grade custodial solution for Bitcoin, we’re interested in having that exist and it’s a long road.”

Chavez noted that the company is working on a type of Bitcoin derivative, non-deliverable forwards, which are over the counter derivatives settled in U.S. dollars. The reference price is reportedly the Bitcoin/USD price established by a group of exchanges.

The price of Bitcoin and other digital currencies plummeted following the news about Goldman Sachs cancelling plans for a trading desk, with total market cap dropping by $12 billion in an hour. All of the top 100 coins experienced losses over the last 24 hours. BTC is trading around $6,479, having lost more than 6 percent on the day. At press time, total market capitalization is around $206 billion, according to Coinmarketcap.

Posted on

South Korea Post Service Seeks Crypto ‘Know-How’ From Goldman Sachs

South Korea’s national postal service Korea Post (KP) will meet with Goldman Sachs executives to gain “know-how” about cryptocurrencies, Bloomberg reported Wednesday, September 5.

The service, which oversees an investment fund of $112 billion, said a meeting about crypto had already taken place with Goldman’s incoming chief executive, David Solomon, in New York. Speaking to the Bloomberg in an interview, the post service’s president Kang Seong-ju confirmed that  KP officials would also travel to Hong Kong to meet with Goldman’s dedicated cryptocurrency team there, which the banking giant set up earlier this year.

“I asked Goldman to pass on their know-how in the cryptocurrency area,” Kang told the publication, adding:

“Since cryptocurrencies are considered to have potential and are something many people are watching, we’ll need to learn the strengths and weaknesses.”

The news represented somewhat ironic timing, with reports surfacing the same day that Goldman had shelved plans to offer cryptocurrency trading products. The revelation produced temporary volatility across cryptocurrency markets, Bitcoin losing up to $500 in minutes and going on to lose support at $6,500.

Unlike its future mentor, Bloomberg continues, KP has “no plans” for cryptocurrency investment of any sort, Kang nonetheless underscoring the general narrative that the phenomenon is one to grasp rather than avoid.

“We should accumulate know-how,” he added.

South Korea continues to formalize its cryptocurrency regulations, Cointelegraph reporting on how government debate currently revolves around the country’s controversial Initial Coin Offering (ICO) ban and the creation of a Malta-styleblockchain island.’

Posted on

Bitcoin (BTC) Price Analysis: Sharp Tumble on Goldman, ShapeShift

Bitcoin bounced off the top of its long-term wedge formation and might be due for another test of the key support zone. This resistance lines up with the top of a short-term rising wedge and the breakdown from this pattern signals a drop in the days ahead.

The 100 SMA is below the longer-term 200 SMA on the daily time frame to confirm that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. Price has also fallen back below the 100 SMA dynamic inflection point to indicate that this could hold as resistance moving forward.

RSI is on the move down, also confirming that bearish momentum is in play. This oscillator has a bit of room to slide before hitting oversold levels, which means that sellers could have the upper hand for a bit longer. Stochastic has just made its way down from the overbought region also, and this oscillator has much more room to fall from here.

Reports that Goldman Sachs is backing off its plans to create a bitcoin trading desk is being blamed for the sharp decline. After all, this would be a blow to institutional interest in bitcoin and cryptocurrencies, likely dampening volumes and activity ahead.

This also likely weighed on investors’ optimism that the SEC could approve pending bitcoin ETF applications, especially since the regulator had concerns about potential price manipulation and fraud in connected markets. These concerns were also raised by Goldman Sachs execs, citing that more steps need to be taken for a regulated bank to trade bitcoin.

According to a statement from the bank:

We have not reached a conclusion on the scope of our digital asset offering.

Furthermore, analysts also blame the introduction of a registration process for instant bitcoin exchange ShapeShift for worsening the slide.

Girl in a jacket

loading…

Posted on

Digital Wealth Management Firm Apex Clearing to Launch Crypto Investment Subsidiary

Financial clearing and execution company Apex Clearing confirmed it planned to open a dedicated cryptocurrency entity in a press release Wednesday, September 5.

Apex, which has operated since 2012, will create Apex Crypto to give existing clients access to various cryptocurrencies, initially including Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), and Litecoin (LTC) among others.

Investing platforms such as broker dealers using Apex will thus be able to provide cryptocurrency investment opportunities to their own users, the press release notes.

The move, CEO Bill Capuzzi says, reflected the “continued surge” in demand for crypto-based investment options. Capuzzi added:

“We are helping our clients break down barriers to provide the speed, efficiency and flexibility they need to serve the next generation of investors.”

Apex Clearing plans to deliver Apex Crypto in Q4 this year, the announcement coming the same day Wall Street giant Goldman Sachs reportedly revealed it would shelve its own cryptocurrency product plans.

According to Business Insider, quoting “people familiar” with the developments, Goldman Sachs had “come to the conclusion that many steps still need to be taken, most of them outside its control, before a regulated bank would be allowed to trade cryptocurrencies.”

Nonetheless, interest from investment sources in the crypto market continues, with investors eyeing Intercontinental Exchange’s Bakkt platform, also set for a Q4 debut.

Posted on

Goldman Sachs Drops Plans To Establish Crypto Trading Desk

Goldman Steps Away From Trading Desk Plans, Still Intends To Create A Custody Service

Institutional investment has long been hailed as the future of this industry, as optimists claim that the interest of Wall Street firms will drive the growth of this early-stage market. But in an unexpected setback, as reported by Business Insider, Goldman Sachs, indisputably one of the most respected firms in the business world today, has just dropped its plans to establish a Bitcoin (BTC) trading desk.

As reported by Ethereum World News in October of last year, the Wall Street giant hinted that it had plans to offer Bitcoin (BTC) trading, but now it seems that this plan has been all but quashed.

According to those familiar with the matter, this will be a temporary move, as the firm will be delaying these plans for “the foreseeable future.” When queried about why this U-turn took place, the insiders noted that the regulatory uncertainty regarding this asset class is putting off Goldman’s top brass.

This decision will also see Goldman move plans to open a trading desk lower on the ladder of crypto-related products that the financial giant intends to offer. But as aforementioned, this setback is likely to be only temporary, as those familiar with the matter noted that this decision may be revised in the near future if the regulatory climate improves.

One of the insiders also noted that the firm’s executives concluded that “many steps still need to be taken, most of them outside the firm’s control,” before a firm like Goldman can make a legitimate foray into cryptocurrency trading.

A Goldman Sachs representative commented on the matter, reiterating a statement that was made in August:

“In response to client interest in various digital products, we are exploring how best to serve them in the space. At this point, we have not reached a conclusion on the scope of our digital asset offering.”

However, it isn’t all bad news, as Goldman is reportedly still making moves to establish a crypto custody service for its bigwig clients. Many cite a lack of proper custody solutions as a primary reason why institutions are hesitant to enter this market, so a fully-fledged custody service from a household name could prove to be a long-term asset for the crypto market as a whole.

Additionally, the financial company still intends to make markets for its clients to trade BTC futures, as Ethereum World News reported in May. But as fittingly alluded to by Brian Kelly, CNBC commentator and CEO of BKCM, many naysayers may gloss over the fact that custody and futures are still available and focus on the “negative” trading desk news instead.

CNBC claims that this news was the catalyst that pushed the cryptocurrency market down by over 7% within a few hours, but due to the unpredictable and volatile nature of this nascent market, some believe that this was just an untimely coincidence.

At the time of writing, Bitcoin has fallen to $6,900 and is down 6% on the day.

Photo by Wes Hicks on Unsplash

loading…

Posted on

Business Insider: Goldman Sachs Drops Plans to Open Crypto Trading Desk

Goldman Sachs Group Inc. is halting its plans to open a cryptocurrency trading desk, Business Insider reports September 5, citing sources familiar with the matter.

The bank’s plans to create a crypto-focused unit by the end of June 2018 were originally reported by Bloomberg, with sources claiming that Goldman Sachs aims to become “the first large Wall Street firm to make markets in cryptocurrencies.”

Now, Business Insider reports citing unnamed sources that the bank has lowered the priority of this project, as the regulatory environment in the crypto industry remains unclear. It might take many steps before a regulated bank could trade digital assets, most of them outside Goldman Sachs’ control, sources reportedly reveal.

“At this point, we have not reached a conclusion on the scope of our digital asset offering,” Goldman Sachs spokesperson Michael DuVally told Reuters.

However, the bank is not going to fully reject crypto trading. As Business Insider’s sources claimed, Goldman Sachs is about to focus on a custody product for crypto, which will allow it to hold cryptocurrency on behalf of large clients and track its price.

Back in May, Goldman Sachs’ executive Rana Yared stated that the bank “had concluded [B]itcoin is not a fraud” as the company officially revealed its plans to buy and sell cryptocurrencies.

Nevertheless, the company’s top officials remained sceptical about digital assets. Goldman Sachs’ CEO Lloyd Blankfein once said Bitcoin trading was not for him, but clarified that it he’s open to considering it, if the cryptocurrency becomes “more established.”

Posted on

Goldman Sachs Said to Have Sidelined Plans for Crypto Trading Desk

Investment bank Goldman Sachs has reportedly dropped plans to launch a cryptocurrency trading desk, for now at least.

A Business Insider report on Wednesday, citing “people familiar with the matter,” said the decision has been made as the regulatory situation in the U.S. is still a gray area when it comes to cryptocurrencies.

However, per the sources, the banking giant hasn’t abandoned the idea completely, but is rather pushing the possibility lower down on its priorities list and could still move to open the desk at a later date.

Further, Goldman Sachs’ plan to start offering a cryptocurrency custody service is apparently still on the table, with Business Insider citing the need for “reputable custody offerings” to bolster confidence around involvement in cryptocurrency at Wall Street firms.

As reported by CoinDesk, the bank was first revealed to have an interest in a crypto trading venture back in October 2017, though it was said to be in the very early stages of exploring the idea.

In May, however, it was also suggested, once more via anonymous sources, that it would use its own money to trade bitcoin futures products from CBEO and CME on behalf of its clients. Goldman was also preparing to launch “its own, more flexible version of a future, known as a non-deliverable forward, which it will offer to clients,” according to the New York Times at the time.

The latest piece of Goldman’s crypto jigsaw came into place in early August, when it followed up the futures plan with the possibility of a crypto custody service aimed to protect institutions’ holdings from hacking and accidental loss.

So far, though, little has been said publicly by the bank on these potential moves into the crypto space.

In fact, the bank has previously been somewhat skeptical about cryptos, warning investors in January that they were “in a bubble.”

Red traffc light image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.