Bitcoin (BTC) Price Crashes As Goldman Ditches Trading Desk
Bitcoin (BTC) prices have dropped over 12% today, following a week of gains. This time, the sell off was likely triggered by Goldman Sachs announcing it will drop short-term plans for a crypto trading desk. The news has investors nervous that the US financial giant might know something about Bitcoin and cryptocurrencies that the market has not learned yet.
Goldman Sachs Suspends Crypto Trading Desk
Back in December 2017, Bloomberg reported that ‘people with knowledge of the strategy’ the bank was looking to set up a trading desk. Per that report, Goldman Sachs wanted to have it ready by the end of June 2018.
But it seems that the opportunity to create a trading market has turned the other way for Goldman Sachs. Business Insider cites unnamed sources saying that the crypto trading desk is now “not a priority” for the institution. There are several steps that need to be fulfilled in order for the bank to enter the crypto market in this way.
In a statement, Goldman Sachs commented on the matter:
“In response to client interest in various digital products, we are exploring how best to serve them in the space. At this point, we have not reached a conclusion on the scope of our digital asset offering.”
This announcement of Goldman Sachs’ interest in crypto trading was important for the virtual currency market. It would have allowed enterprises and institutional investors to enter the market. Clearly, though, the regulatory landscape is far from ideal. As Bitcoin ETFs have been denied by the U.S. Securities and Exchange Commission (SEC), perhaps Goldman Sachs is not seeing the frameworks it needs to introduce cryptocurrencies to its clientele.
Clearly, the market still respects Goldman Sachs outlook on the crypto market. Institutional and wealthy investors are likely looking for regulation support and legal protections before pouring money in.
Commenting on the Goldman decision, Brian Kelly said:
“They were not a part of the ecosystem yet, but to the extent that they represent the institutional herd, this is a negative.”
The response to this news has been swift and negative. The overall market has lost around 18% of its capitalization in just the half-day after the announcement. In the last 24 hours, Bitcoin lost 12% of its price and Ethereum and other coins have fared worse. Panic selling from the downtrend has likely kicked off a downward spiral that could continue until BTC prices hit support levels; some of which are as low as $5900.
It remains to be seen what the drop will do to technical indicators; which had crossed over from Buy to Sell after several days of increasing price action. This chart shows another drop forthcoming, even after a correction upward of the drop from the Goldman news.
An even more drastic view sees today’s drop as contributing to a drastic downward push on Bitcoin price; seeing it fall past the $5000 level until there are more supports. This would include a lot of panic selling from a bit of news; but if Goldman Sachs knows something that the market finds out later we may see this come to fruition.
The next few days will show investors a lot about Bitcoin price action. Will we see a price correction from this big drop? Or will sellers follow the lead from this action and continue pushing Bitcoin downward? Its low point is around $5800 for the year; will we see that in September?
Carlos is an international relations’ analyst specializing in cryptocurrencies and blockchain technology. Since 2017, Carlos has written extensively for UseTheBitcoin and other leading cryptocurrency sites; with over 2,000 articles published.
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