Bitcoin has dropped below $3,500 in the last few days. If you will look at Bitcoin’s performance last year, it won’t be surprising if you agree with Nouriel Roubini that it is a bubble after all. Nouriel Roubini, the NYU economist who predicted the 2008 crisis thinks that the crypto market is a bubble and it did burst.
This year, a lot of regulatory changes happened in different parts of the world. Some countries are open to the entry of cryptocurrencies while others were close-minded to the possible changes that cryptos bring. China, for instance, has renewed its goal towards eliminating crypto-related activities. And also, you have India which has banned banks from giving crypto companies a bank account.
Is The Change Healthy?
However, despite the bearish market and one of the worst corrections in the ten-year history of Bitcoin, Goldman Sachs thinks that it is a healthy development in the market.
Goldman Sachs has refused to progress its direct custodian features for cryptos. The head of digital assets markets Justin Schmidt commented on this saying that “One of the things they ask me is ‘Can you hold our coins?’ and I say ‘No, we cannot’”. He also added that “One of the things we have to take into consideration when we’re building out our business is what we can and cannot do from a regulatory perspective”.
This time, it is clear that Goldman is hesitating mainly because of the lack of regulatory clarity in the industry. The murky legal landscape still has a lot of things to work on. Goldman was the first to offer Bitcoin futures. And because of this, many believe that the bank is inclined towards participating in the crypto market.
There were also rumors that Goldman is about to have its own trading desk. However, this wasn’t the case.
Schmidt also commented on the increasing demand for direct custodial services, especially now that there are a lot of hacking incidents that already happened in the industry.
Is Goldman ready to offer more in the coming months? In fact, if you will look at the Bitcoin ETF application by VanEck and Solid X that has the strongest chance of getting approved by the US Securities and Exchange Commission, could this pose demand on Goldman that they should offer expanded services to their clients?
For Schmidt, he thinks that the participation of Fidelity and Bakkt in the market are good developments for the crypto market. He also believes that institutional investors take more precaution whenever they are investing which even increases the demand for custodial services. He said that “Custody is this foundational piece that is absolutely necessary. Custody is part of an overall integrated system where different parts need to work well with each other and safely with each other and you have to be able to trust all the different parts in that chain, from buying something to transferring it to storing it in for the long-term”.
For Schmidt, he also thinks that the bearish market can help get rid of some investors who are simply in it for the quick profits. And he also believes that this could decrease speculation within the crypto market.