Goldman Sachs is taking the opportunity to purchase low-valued crypto businesses while the market is down, following the collapse of FTX.
- FTX experienced one of the largest collapses in crypto history on November 11 when it went into bankruptcy following a liquidity crisis, crashing the crypto market in the process.
- This hasn’t deterred investment firms like Goldman Sachs, which is reportedly seeking to purchase small crypto companies.
- Valuations are low and investors are weary to approach crypto at the moment, Reuters reports.
- The global crypto economy was worth $2.9 trillion at its peak in November 2021 and is currently valued at roughly $865 billion.
Why it’s Important
As we previously reported, crypto investors are still very committed to their market and believe blockchain technology holds the future of the internet and financial services. FTX has wounded the industry but Goldman Sachs is still eager to make investments now while the industry is at a low point, believing it will bounce back.
“While the amount Goldman may potentially invest is not large for the Wall Street giant, which earned $21.6 billion last year, its willingness to keep investing amid the sector shakeout shows it senses a long-term opportunity,” says Reuters.
Goldman Sachs head of digital assets Mathew McDermott defended the purchase as an opportunity to inject more responsible and trustworthy investors into the space following the collapse of FTX. The potential of blockchain technology holds potential even as individual currencies are volatile. The 11 companies it has invested in so far include data, compliance, and blockchain management firms.
“We do see some really interesting opportunities, priced much more sensibly,” says McDermott.
Critics of cryptocurrencies remain unconvinced that the collapse of FTX will be anything but devastating to the overall crypto economy, with Morgan Stanley CEO James Gordan speaking at Reuters Next Conference recently that, “I don’t think it’s a fad or going away, but I can’t put an intrinsic value on it.”
New York Times economist Paul Krugman additionally spoke out against the viability of blockchain technology in a recent opinion piece, noting that he doesn’t see cryptocurrency recovering from its ongoing “Crypto Winter.”