Last 24 to 48 hours the fall in cryptocurrency prices across the board has been associated with the Goldman Sachs stance on cryptocurrencies trading. The market has been in free fall since the news appeared n Business Insider, the Wall Street investment bank was planning to ditch crypto trading desk. Understanding the gravity of the situation, the CFO of Goldman Sachs has come out to clarify the company’s stance on cryptocurrencies.
Goldman Sachs CFO says the bank is working on bitcoin derivative for clients
As reported by CNBC, Goldman Sachs Chief Financial Officer Martin Chavez came out and cleared the FUD around report that the bank was ditching plans to launch a cryptocurrency trading desk, calling it a “fake news.” In fact, he clarified saying that the wall street investment bank was working on a type of derivative for bitcoin because “clients want it.”
“I never thought I would hear myself use this term but I really have to describe that news as fake news,”
Goldman Sachs Chief Financial Officer Martin Chavez said on stage at the TechCrunch Disrupt Conference in San Francisco.
Chavez says the bank is working on a bitcoin derivative known as a “non-deliverable forward,” because of demand from clients which the bank feels the need to satisfy.
“The next stage of the exploration is what we call non-deliverable forwards, these are over the counter derivatives, they’re settled in U.S. dollars and the reference price is the bitcoin-U.S. dollar price established by a set of exchanges,” Chavez.
The FUD news that caused panic is finally at rest
According to reports published in Business Insider day before yesterday, Goldman Sachs was ditching plans to open a desk for trading cryptocurrencies in the foreseeable future, according to people familiar with the matter, as the regulatory framework for crypto remains unclear. As part of that decision, Goldman has moved plans to open a desk for trading cryptocurrencies further down a list of priorities for how it can participate in cryptocurrency markets, the people said.
This news top the market by sudden surprise and everyone started dumping coins across the board assuming that this move by Goldman would mean there would be no institutional money flowing into the crypto market. Institutional money is considered by many as a trigger for next bull run in cryptos and this news meant there would be no much reason for traders to stay in the market in the short term.
The fragility of the crypto market was tested by this news as it took Bitcoin (BTC) down over five percent bringing it below USD 6400. The news affected the altcoins even more with Ethereum (ETH) (down 14 percent), XRP (down 13 percent), EOS (down 16 percent) and Litecoin (LTC) (down 11 percent), according to data from Coinmarketcap.com captured sometime after the news surfaced.
The statement seems to have bought some calmness to the market as most of the leading cryptocurrencies have seen a good recovery since then. All top 10 leading cryptocurrencies were in the green while reporting, with Bitcoin above USD 6500. The best gains were seen in Monero and IOTA both rising over 5%.
Goldman statement is definitely a sentiment positive for the cryptomarkets but what’s more important is the CFO saying that there is still demand cryptos from their clients end. This interest if translates well could swell the crypto markets and probably take them to their all-time highs which they hit last year.
Will other wall street banks also consider crypto offerings for their clients like Goldman Sachs? Do let us know your views on the same.