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Crypto Investors Gear Up For Goldman Sachs’ $2B Shocker

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Crypto Market’s leading assets traded in the green on June 27, after going through major downdrafts. Bitcoin, XRP, Cardano, Doge, and the like have recovered after months of downturn. Dogecoin and Solana in particular have regained over 20% in the weekly index.

Bitcoin’s price too rebounded 20% since crashing to a low of under $18,000 last week.

But a recent report of Wall Street giant Goldman Sachs looking to raise $2 billion to buy up distressed assets of beleaguered crypto lender Celsius has generated quite an attention.

Anonymous sources familiar with the matter said if the proposed deal goes ahead, investors would be able to buy Celsius’ assets at potentially steep discounts in the event of a bankruptcy.

The move comes after Goldman’s recent bullish push into crypto, including establishing its own trading desks and gauging interest from institutional investors in lending products.

For those new to the market, Celsius was on the brink of insolvency after suspending user withdrawals from the platform earlier this month, citing “extreme market conditions”. This in turn accelerated a price crash that sent bitcoin spiraling under $20,000.

According to a Forbes report, Goldman Sachs’ reported deal for Celsius’ crypto assets is likely to infuse some degree of confidence into crypto traders who were left rattled by the mega sell-offs.

Recently. digital assets exchange FTX was reportedly in talks to acquire a stake in BlockFi after the trading platform extended a $250 million credit to the lending firm.

Crypto Bailouts To Embattled Projects

According to a report from the Wall Street Journal, FTX is currently in talks with BlockFi regarding purchasing a stake in the firm, but so far no equity agreement has been finalized.

FTX founder and CEO Sam Bankman-Fried a.k.a SBF, has provided a helping hand to many crypto projects amid a bear market that forced many firms to cut down staff.

However, it’s not clear if FTX’s reported intent to buy a stake in BlockFi was linked to financial difficulties at the crypto lending firm amid a bear market.

On 22nd June, Trading firm Alameda Research, under SBF’s management, announced it had provided loans worth 15,000 Bitcoin [BTC] to Voyager Digital which is seeking to cover losses from its exposure to Three Arrows Capital [3AC].

Goldman Sachs and Barclays Spearhead $70M Funding Round For A Crypto Fintech

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Leading investment banks Goldman Sachs and Barclays are among the few to lead a $70 million funding round for a UK-based crypto trading platform Elwood Technologies, which valued the firm at around $500 million, according to a report by Financial Times.

The funding exercise was supported by crypto-friendly German bank Commerzbank, digital asset investment manager Galaxy Digital and Dawn Capital. Elwood was founded by billionaire British hedge fund manager Alan Howard.

The latest backing is another example of the growing adoption of digital assets despite the prevailing market condition.

Speaking on the financial round, Elwood Technologies CEO James Stickland said the fundraising was “another validation of the longevity of crypto” brushing off the falling prices from the last few weeks:

We’re getting investments from financial institutions that aren’t expecting to get massive returns in 15 minutes. They’re investing in the infrastructure, I think it’s a reassurance message.

Elwood Technologies provides a crypto portfolio management system with crypto market information and trading infrastructure for institutional investors that features an interface that connects to crypto exchanges, liquidity providers, and custodians.

Commenting on the deal, Goldman Sachs’ global head of digital assets Mathew McDermott, stated that the investment reflects its “continued commitment” to cryptocurrencies. He then added

“As institutional demand for cryptocurrency rises, we have been actively broadening our market presence and capabilities to cater to client demand.”

Goldman Sachs’s Massive Crypto Push

Last month, Goldman Sachs [GS] offered its first bitcoin-backed loan which signifies Wall Street’s deepening crypto ties. The banking giant claimed its’s secured lending facility enabled a borrower to use bitcoin as collateral for a cash loan.

Goldman, which has a dedicated digital assets team, traded its first over-the-counter bitcoin options to Galaxy Digital in March.

Looks like the investment firm is following in the footsteps of other traditional finance giants moving further into crypto. A few months ago, Cowen launched a digital assets unit and BlackRock [BLK] participated in the  $400 million funding round for USDC stablecoin creator Circle.

With regards to Elwood, the firm will continue to have Howard as the majority stakeholder, who had been one of the UK’s most prominent investors to take the plunge into crypto markets.

Coinbase Seems to Be the 1st Ever Bitcoin-Backed Loan Acquirer From Goldman Sachs

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The mysterious corporation that took out Wall Street’s first bitcoin-backed loan from Goldman Sachs has been exposed as Coinbase, America’s largest crypto exchange. Goldman Sachs controls $2.5 trillion in assets as of 2021.

Coinbase has taken out a Bitcoin-backed loan from Goldman Sachs, according to Bloomberg, as part of a strategy to strengthen ties between the crypto and trading worlds.

Coinbase Institutional Head Brett Tejpaul said, “Coinbase’s work with Goldman is a first step in the recognition of crypto as collateral, which deepens the bridge between the fiat and crypto economies.”

The loan’s cash amount was not disclosed, but it was backed by a portion of Coinbase’s total holdings of 4,487 Bitcoin, which are presently valued at almost $170 million. The loan includes a 24-hour risk monitoring system, as well as a requirement that Coinbase fills up its BTC collateral if prices fall too low.

Coinbase’s first bitcoin-backed loan

While Bitcoin and other crypto-backed loans are common in the crypto industry, particularly on DeFi protocols, they are uncommon in traditional banking, where crypto is seen as far too risky and unpredictable as collateral.

Asset management firm Arca indicated in a May 2 blog post that potential borrowers are looking for more such opportunities. It claimed that “[this loan] demonstrates institutions’ willingness to utilize new tools with traditional methods.”

Brian Armstrong on free speech

Meanwhile, Coinbase CEO Brian Armstrong has laid out his vision for decentralized social media networks that allow for free speech.

He told the Milken Institute on May 2 that Twitter, now owned by Elon Musk, had the opportunity to “essentially embrace adopting a decentralized protocol” that the network could function on.

“I believe that freedom in all forms is worth preserving, and a lot of crypto is about economic liberty.” Another version is the right to free speech.”

Armstrong argues that a decentralized social media network would enable content producers to choose their own moderation standards. Access to all material would be democratized rather than algorithmically determined.

This would prevent certain content streams on a platform from being stifled, allowing users to see whatever they want.

Goldman Sachs unites with Galaxy Digital to offer ETH fund

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Leading global investment bank Goldman Sachs [GS] has partnered with diversified asset management firm Galaxy Digital to offer its clients access to ether [ETH]. This is in accordance with regulatory documents filed with the U.S. Securities and Exchange Commission [SEC] on 8th March.

Filings show that with an investment of at least $250,000, the fund has collected over $50 million from 28 clients. It’s not known exactly how much GS is responsible for as the investment bank was not involved when it first launched.

As stated in the amended Form D filing, “Goldman Sachs & Co. LLC will receive an introduction fee” for a number of clients it brings to the “Galaxy Institutional Ethereum Fund.” Sources revealed that the latter had issued that fund last March.

Galaxy Digital is not the first time Goldman Sachs has collaborated with. Previously in June, Galaxy agreed to pour liquidity to Goldman Sachs’ Bitcoin [BTC] futures offering. Besides that Galaxy also offers a bitcoin fund to Morgan Stanley [MS] clients in a similar arrangement, a review of the filings shows.

Apart from GS, an alternative investments platform called CAIS Capital LLC will receive “placement fees” for referring clients to the institutional fund, Tuesday’s SEC filing said. It’s separately involved in a different Galaxy-backed Ethereum fund whose filing also hit Tuesday.

The latest development has its roots back in mid-2021 when Mathew McDermott, head of digital assets at Goldman announced that the investment bank was working to offer options and futures trading in Ether.

Goldman Sachs hit with talent exodus

The bank recently grabbed headlines when its global co-head of operations Roger Bartlett, a 16-year veteran announced joining crypto exchange Coinbase to lead its financial operations, in a LinkedIn post, just weeks ago.

In May 2021, crypto exchange Coinbase hired Goldman’s former co-head of government affairs Faryar Shirzad as its new chief policy officer to help with lobbying efforts.

Similarly, Chris Perkins, a former Citigroup executive who had around 725 employees working under him, left last September to become the president of crypto investment firm Coinfund. As reported by Financial News, crypto has become a much sought-after career option for executives, especially at large investment banks.

Goldman Sachs praises Ethereum’s use-case advantage Ethereum in the latest letter

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The altcoin season has approached sooner than expected with multiple coins shooting up the price charts. Ethereum, the largest altcoin in the world, has had a tremendous year with a growth rate of 854 percent. Although the climb was punctuated with bear dips, major financial institutions were putting their faith in Ethereum to overtake Bitcoin. Goldman Sachs recently praised the Vitalik Buterin co-founded cryptocurrency and its widespread use cases.

Being one of the largest banks in the United States, Goldman Sachs’s comments play a big role in paving the way for mainstream cryptocurrency adoption. In a note to clients on Tuesday, the bank stated that Ethereum had “real use potential” which was the first step to becoming the “dominant store of value”. A lot of decentralized applications [dapps] built on Ethereum have taken off, prompting other organizations to jump on the bandwagon.

The letter from Goldman Sachs read:
“[Ether] currently looks like the cryptocurrency with the highest real use potential as Ethereum, the platform on which it is the native digital currency, is the most popular development platform for smart contract applications.”

At press time, Ethereum was surging at $2378 with a total market cap of $276.8 billion. A 111.3 percent price increase over the past week allowed the cryptocurrency’s daily trading volume to clock $23.9 billion. Only Binance Coin’s 13 percent weekly gain was ahead of Ethereum in the top 10 cryptocurrency club. Goldman’s comments on Ethereum come a few weeks after analysts from the bank had called the cryptocurrency that may not be as “inevitable” as people thought it was.

According to some financial analysts, the competition among cryptocurrencies was a major risk factor when mixed with user holdings. They added that once digital assets come out of their nascent stage, they can try to qualify to become a safe haven asset. Insider sources within the cryptocurrency world, however, only had glowing reviews for the world’s largest altcoin.

Celsius Network CEO Alex Mashinsky recently said that Ethereum had already surpassed Bitcoin in dollar holdings at the company’s repository. In his words:

“The flippening already happened. The broader market will soon follow the Ethereum overtake in the next year or two.”

Goldman Sachs leads repo trade via JPMorgan’s blockchain network

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Goldman Sachs, the multinational investment bank and financial services company, has reportedly joined JP Morgan’s Repo blockchain network. As part of this, the company carried out its first repo trade using JPMorgan’s private blockchain network.

Goldman Sachs had led the initial trade on the 17th of June that involved exchanging a US Treasury bond for JPMCoin which took three hours and five minutes to complete. The entire transaction was quantifiable in nature since it could pinpoint the accurate amount of time required for completion. Hence, this was in contrast to the traditional repo market.

Following the development, Mathew McDermott, global head of digital assets for Goldman’s global markets division was quoted saying,

“We see this as a pivotal moment for the digitization of transactional activity.”

According to the exec, identifying the precise time is a big step up from the current market, as is the way the collateral and cash are interchanged simultaneously and immediately, the report said. McDermott also went on to add,

“We pay interest per the minute,” he said. “We firmly think this will change the nature of the intraday marketplace.”

The Repo blockchain was first unveiled in December sits within JP Morgan’s Onyx branch, which hosts multiple blockchain offerings. Goldman Sachs became the first to reveal that it was using the enterprise blockchain network, with BNY Mellon offering custody.

For the uninitiated, repurchase agreements, or better known as “repos,” are essentially a kind of loan where collateralized securities sold by financial establishments in a contract are bought back at a slightly higher cost some other time, usually on an overnight basis.

Goldman Sachs’ Tryst With crypto

Goldman Sachs was previously one of the many pessimists that doubted Bitcoin’s capabilities. However, since the foray of massive institutional capital into space, Goldman took a whole 180-degree turn on its previous stance.

The company had recently started trading Bitcoin futures after it partnered with Mike Novogratz-founded cryptocurrency merchant bank Galaxy Digital. A week back, Goldman Sachs had also revealed its plans to offer options and futures trading in Ether [ETH].

Goldman Sachs moves over Bitcoin as it steers towards Ether

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Prominent bank, Goldman Sachs revealed that it would be elevating its crypto trading service with the inclusion of Ether [ETH].

Ethereum [ETH] witnessed a prominent plunge over $1K all the way on to an all-time high of $4K. The altcoin certainly stood out during the last crypto rally overshadowing several assets. While the latest bear invasion destroyed the gains amassed by coins like Bitcoin [BTC], Binance Coin [BNB], and many others, Ethereum managed to retain itself at $2.5K.

Even though Bitcoin remains the most popular cryptocurrency, many have been eyeing Ethereum as well as other cryptocurrencies. Goldman Sachs seemed to be the latest platform expressing interest in onboarding another crypto asset apart from Bitcoin.

Goldman Sachs’ head of digital assets eyes Ether

Speaking with Bloomberg, the head of digital assets at Goldman Sachs,  Mathew McDermott revealed that the bank was looking forward to offering futures as well as options trading in Ether. While the bank had previously made news for embracing Bitcoin, its latest move comes as a plunge towards the same.

McDermott detailed,

“We’ve actually seen a lot of interest from clients who are eager to trade as they find these levels as a slightly more palatable entry point. We see it as a cleansing exercise to reduce some of the leverage and the excess in the system, especially from a retail perspective.”

With volatility striking the crypto market, the price of cryptocurrencies witnessed a massive fall. This further insinuated several investors to pull out from the industry. Goldman Sachs, however, seemed to be sure about its venture into the crypto-verse. McDermott stressed how the interest in crypto would prolong without a stop despite the price change of digital assets.

He added,

“Institutional adoption will continue. Despite the material price correction, we continue to see a significant amount of interest in this space.”

The bank’s crypto-friendly moves over the last couple of months have certainly lured investors into the market.

Goldman Sachs To Offer Notes Linked To ETF That May Give Exposure To Bitcoin

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Goldman Sachs, the American multinational investment bank and financial services company has filed with the US Securities Exchange And Commission [SEC] to offer an investment product that could give exposure to its clients to cryptocurrency such as Bitcoin.

This new investment product is tied to the performance of the ARK Innovation ETF, which is capable of investing in Bitcoin and products and services inside the crypto-asset’s boundary. While Goldman Sachs filing is not for a Bitcoin ETF, however, the product that would track an ETF exposed to the share of the cryptocurrency indirectly via an investment in a grantor trust.

The filing by Goldman Sachs stated,

“The ETF is an actively-managed exchange-traded fund that will invest under normal circumstances primarily (at least 65% of its assets) in domestic and foreign equity securities of companies that are relevant to the ETF’s investment theme of disruptive innovation. The ETF investment advisor defines “disruptive innovation” as the introduction of a technologically enabled new product or service that potentially changes the way the world works.”

Goldman Sachs And Its Change Of Heart For Bitcoin

The news comes a couple of weeks after the international banking giant’s COO John Waldron had revealed exploring Bitcoin ETF and custodial services with the US regulator due to the growing demand for the underlying cryptocurrency. In addition, the bank had also recently rolled-out its cryptocurrency trading desk again in a bid to support futures trading for BTC.

It is important to note that Goldman Sachs is among the country’s banking organizations that have not been a fan of Bitcoin for the longest time. Just last year, the multinational bank had called that Bitcoin is “not an asset class”. However, the change of winds could essentially strengthen Bitcoin’s position in the traditional finance world.

Currently, there are seven Bitcoin ETF applications in the US apart from Goldman Sachs. They are – Fidelity, SkyBridge, Morgan Stanley/NYDIG, VanEck, Valkyrie, WisdomTree, and Bitwise. This essentially meant that Bitcoin is just a green light away from huge capital inflows.

Coinbase Eyes Goldman Sachs To Spearhead Its IPO

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Cryptocurrency exchange, Coinbase made news throughout the year. The exchange invaded the headlines for all the wrong reasons. The Brian Armstrong lead exchange suffered an array of outrages, especially while Bitcoin was recording a surge. This time, however, the exchange made headlines following a series of developments it was engaging in. Starting from news pertaining to the Rosetta developer’s grants to its recent activity in the IPO section.

Coinbase’s Ties With Goldman Sachs

Almost all the platforms in the crypto universe have been bolstering the mainstream adoption of crypto. Coinbase seems to be jumping on to the bandwagon. The exchange recently revealed that it had urged the prominent investment banking company, Goldman Sachs to spearhead its imminent IPO aka initial public offering. The San Fransisco based exchange’s connection with the banking giant goes way back as the co-founder of Coinbase, Fred Ehrsam was reportedly a part of Goldman Sachs from 2010 to 2012.

This news comes out a day after the exchange revealed its intentions of going public. A draft registration addressed to the SEC had shed light on the exchange’s latest move. While the exchange was valued at around $8 billion back in 2018, a recent report from Messari, a crypto analytics platform, suggested that it could be worth $28 billion post its offering.

Coinbase Commerce’s Latest Addition

In a recent tweet, the exchange pointed out that its subsidiary, Coinbase Commerce had incorporated an invoicing feature into its system. Making it available for over 8,000 merchants, sending an invoice got a lot easier. The tweet read,

“Invoicing on Coinbase Commerce is now available. Merchants can easily create and send crypto invoices that customers can view and pay online. We’re building simple crypto payment tools to help merchants achieve their business goals. Learn more here: http://commerce.coinbase.com”

While several lauded the exchange for its developments, a few others infiltrated the comment section with issues pertaining to the cryptocurrency exchange’s website. Several members of the crypto community suggested that San Fransisco based exchange was trying to become more like a bank as opposed to a cryptocurrency exchange.

JPMorgan’s Bitcoin Flip Complete With a Bullish Report

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JPMorgan Chase, the largest bank in the United States and once the biggest critic of Bitcoin, now seems to have completely changed its mind. Besides, JPMorgan’s Bitcoin flip seems to be sitting well at the price of the world’s leading cryptocurrency. Bitcoin is on the rise again and has already added about $200 after dropping to $9,000 price level recently.

In the past, Jamie Dimon, CEO of JPMorgan Chase, labeled Bitcoin a fraud. Damon also described the obsession in BTC as a tulip bulb. However, it appears that the large financial institution is switching its stance towards the world’s top virtual asset by market capitalization.

 

JPMorgan Chase vs. Goldman Sachs

According to a new report published by JPMorgan Chase, the bank’s researchers describe Bitcoin as ‘mostly positive,’ stating that it has ‘longevity as an asset class.’ This is the complete opposite of what JPMorgan’s huge rivals, Goldman Sachs noted in their latest clients’ call for bitcoin and gold. According to Goldman Sachs, bitcoin is a poor investment, adding that BTC is not in any way, shape, or form an asset class.

The report by JPMorgan read:

“Though the [bitcoin] bubble collapsed as dramatically as it inflated, bitcoin has rarely traded below the cost of production, including the very disorderly conditions that prevailed in March.”

In March, the price of Bitcoin came tumbling down, resulting in the flagship cryptocurrency losing about 70 percent of its value. A month before the March crypto market crash, Bitcoin was trading well above the $10,000 mark. A few weeks later, the price dropped significantly to slightly hit the $3,000 price level, heartbreaking many investors across the world. Many traders and investors were wondering whether 2018 was being replicated all over again.

Nevertheless, this wasn’t the case this time around. Within thirty days, the top cryptocurrency had managed to recoup almost all it had lost with its price action; slightly reaching the $10,000 mark in both May and June. Those quick reflexes to regain a 70 percent loss amid an economy ravaging pandemic should not be downplayed.

What next after JPMorgan’s Bitcoin flip?

The latest report is another step towards a longstanding JPMorgan’s Bitcoin flip. In 2019, reports surfaced that the financial institution provides banking services to some of the largest cryptocurrency exchanges in the United States, such as Coinbase and Gemini. The report further states that:

“There is little evidence of run dynamics, or even material-quality tiering among cryptocurrencies, even during the throws of the crisis… [Bitcoin] price action points to their continued use more as a vehicle for speculation; than a medium of exchange or store of value.”