Goldman Sachs To Spend Tens of Millions of Dollars On Crypto Firms

Following the collapse of the FTX, Goldman Sachs (GS) is planning to invest in crypto companies for tens of millions of dollars.

Turn a Crisis Into an Opportunity

The fall of crypto exchange FTX is just the latest in several high-profile bankruptcies this year, but Goldman’s willingness to invest in the sector shows that it sees potential in the sector. According to David Solomon, CEO of Goldman Sachs, while cryptocurrencies are "highly speculative," he is bullish on the underlying technology as its infrastructure develops more.

Big banks are taking advantage of the opportunity, said Goldman's head of digital assets, Mathew McDermott.

"We do see some really interesting opportunities, priced much more sensibly," McDermott said in an interview last month.

Bank Focuses On Crypto

Thus far, the banking giant has invested in 11 digital asset companies. McDermott’s team has grown to include a seven-person crypto options and derivatives trading desk. Together with MSCI and Coin Metrics, Goldman Sachs launched datonomy, a data service designed to classify digital assets by use. McDermott said the firm is also developing its own private distributed ledger technology.

The Bottom Line

Goldman Sachs' announcement comes at a time when Standard Chartered predicts Bitcoin could drop below $5,000 next year due to underpricing by investors. The value of bitcoin has already declined by more than 75 percent since last year, and if the crisis worsens, giant banks like Goldman Sachs might be able to take advantage of the situation.