Crypto Pioneer Welcomes Goldman Sachs, Claims It Could Boost Bitcoin
Over recent months, Blockchain.com, Coinbase, and CoinList have all announced the loss of Wall Street veterans, slated to help the startups in their foray into the institutional side of the crypto coin. But, startups in this space seem to be poised to welcome financial institutions into the Bitcoin (BTC) realm with open arms. BitGo chief executive Mike Belshe, for instance, recently noted that the arrival of such firms is something he would accept.
Goldman Sachs Could Push Bitcoin Ten Times Higher
In an interview with The Block, Belshe argues that Goldman Sachs’ arrival into this space and similar forays from other Wall Street household names would be “tremendous.” Touching on Goldman specifically, who is purportedly working on a custody product that would rival his own, Belshe notes that the New York-headquartered institution could bring “five or ten billion into custody in just a few months,” just by virtue of them being Goldman. He elaborates what effect the firm moving into cryptocurrency custody would have on the market:
“That could cause the price [of Bitcoin] to spike, and it could spike on its own by a factor of ten…I’d love to have them in the space.”
For those who missed the memo, last year, rumors began to come to light that Goldman Sachs was working on custodial services for cryptocurrencies like Bitcoin. Although insiders have claimed that the company is postponing its offering, the world-renowned bank is still looking into dipping its toes into this space, which some argue could cause a domino effect across corporate America, and then the world.
They’re Coming For Crypto
No matter how the advent of institutions move the cryptocurrency markets — if at all — the bottom line is that the herd is running (or slowly sauntering in some commentators’ eyes) towards this ecosystem.
An argument could be made that this unique subset of investors, who hold a majority of the cards (cash), are already here in full force.
The CME Group’s in-house Bitcoin futures contract, launched at the peak of 2017’s crypto bubble, saw its biggest trading session to date just weeks ago. According to previous reports from this outlet, February 19th, not 24 hours after the aggregate value of all digital assets spiked by 10%, saw CME’s biggest BTC trading session ever in a seeming bear market rally. The product saw 18,338 contracts, valued at 91,690 BTC ($360 million), traded on that day alone. Compared to the product’s 4,630 contracts in average daily volumes over recent quarters, the 19th’s session was undoubtedly staggering.
Pensions and endowments have also begun to quietly clamor for investment opportunities in this budding space. The University of Michigan’s endowment, which has $12 billion in assets, recently announced its intentions to siphon more of its funds into crypto-centric funds in the near future.
Per a Board of Regents agenda, the institution has its eyes on a “cryptonetwork technology” (they likely mean blockchain technology) fund managed by the world-renowned Andreessen Horowitz. More specifically “CNK Fund I,” as the vehicle in question has been dubbed by the Menlo Park, California-based venture group that backs it, is currently in the University of Michigan’s scopes. According to Kevin Hegarty, the chief financial officer at the state-run educational institution, CNK invests in “cryptonetwork technology companies across the spectrum of seed, venture and growth stage opportunities.”
American pension funds, two from Fairfax County, Virginia to be specific, have also started to “get off zero,” as Anthony Pompliano of Morgan Creek Digital would say. The state’s police force and government employee pension plans recently led a fundraising round for Morgan Creek’s latest venture, a $40 million fund centered around garnering equity in leading upstarts, like Bakkt, Coinbase, and Harbor, and allocations in physical cryptocurrencies.
In spite of all this, there’s still a ways to go. Case in point, effectively none of Wall Street’s biggest names have active investments in cryptocurrencies, in spite of the sentiment that not holding Bitcoin would be irresponsible, due to the asset’s asymmetric risk/return profile.
But, Galaxy Digital chief executive Mike Novogratz is convinced that eventually, the herd will show up in full force. In a Twitter quip, Novogratz, a former Goldman Sachs partner, noted that while institutions are slow to move, they are coming, especially due to the amount of work that is being done “under the hood.” Just look to Fidelity’s upcoming platform and Bakkt’s purported integration with Starbucks as proof of this work. Oh right, and don’t forget the fleshed-out hearsay that Facebook is looking to launch its own digital asset in the coming months.
Photo by Martin Ceralde on Unsplash