The global criptocurrency market reached a new all-time high of $2.9 trillion in late 2021. This year, it has shed around $2 trillion as a result of a string of high-profile corporate failures and a perfect storm of geopolitical tension, increased interest rates and credit tightening from the world's central banks. The market cap was just $865 billion as of yesterday.
After the fall of a one-time crypticurrency knight Sam Bankman-Fried, bargain hunters, deep-pocket investors, and big banks have been able to scoop up promising criptotech companies because of these events. One of these institutional investors is Wall Street giant Goldman Sachs.
According to a report from the Goldman s head of digital assets Mathew McDermott, Goldman Sachs is planning to invest tens of millions of dollars in cryptocurrencies after the collapse of the FTX.
McDermott told Reuters that the Wall Street giant is doing due diligence on a number of different companies, without providing additional details. He said big banks see an opportunity to pick up great companies at discounts. He added that the sudden implosion has reignited the call for regulation in the space and the need for more trustworthy and regulated criptocurrency players. In an interview last month, McDermott said that Goldman Sachs saw really good opportunities even in the midst of the FTX collapse. He said that there are some really interesting opportunities that are priced more sensibly.
The firm sees opportunities to recruit great talent laid off by tech companies because of Goldman's interest in the firm's investments, and the firm sees opportunities to recruit great talent laid off, McDermott said.
On November 11, FTX filed for Chapter 11 bankruptcy, which has quickly rippled across the market, as we reported. The calls for more regulation of criptocurrencies have been amplified by the contagion.
Goldman Sachs is not new to the criptocurrency investing space. In early last year, the Wall Street giant announced the formation of a new criptocurrency trading desk to meet growing institutional demands and offer wealthy investors with bitcoins, cryptocurrencies, and other digital assets.
At the time, Mary Rich, who was recently named head of digital assets for Goldman's private wealth management division, said: "We are working closely with teams across the firm to find ways to give thoughtful and appropriate access to the ecosystem for private wealth clients, and that is something we expect to offer in the near term." While the amount of money that Goldman plans to invest in cryptocurrencies firms is small compared to its main business, the bank's willingness to invest shows it senses a long-term opportunity.
Goldman Sachs is not the only firm hunting for bargains. Others see the current meltdown as an opportunity to shore up their businesses. Mark Bruce, CEO of Britannia Financial Group, said the firm is building its services to serve customers who are eager to diversify into digital currencies.
The London-based startup was not able to do until recently. Britannia is applying for more licenses to provide services such as doing deals for wealthy individuals, he told Reuters.
He said more client interest has been seen since the demise of FTX. Some of the younger businesses in the sector that do not have trust are looking for more trustworthy counterparties, which is why customers are looking for more trusted counterparties.