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As cryptocurrency gets closer and closer to mainstream adoption, the relationship between the crypto market and the traditional financial world becomes tighter and tighter; accordingly, whenever today the traditional financial world rejects cryptocurrency in some way or form, the crypto market slumps.
That what appears to occur now – one of the largest global financial institutions, the investment bank Goldman Sachs, was reported to discard its prior plans to initiate a promising crypto venture, and all major digital currencies turned red. Dark red.
Business Insider reports that according to people familiar with the matter Goldman Sachs has reversed its decision to begin a cryptocurrency trading desk, and currently this initiative was put on hold for the foreseeable future.
Goldman has moved plans to open a desk for trading cryptocurrencies further down a list of priorities for how it can participate in cryptocurrency markets, the people said. It may revive these plans later, they added. But for now, Goldman is focusing on other projects such as a custody product for crypto, which would mean that the bank holds cryptocurrency and, potentially, keeps track of price changes on behalf of large fund clients.
If so, it’s not like Goldman Sachs completely abandons crypto, but simply downgrading its gravity at the moment and hence any crypto-related projects. Instead of a crypto trading desk – which would have offered complete access to immediate crypto-trading transactions of buying and selling – the investment bank presently plans a much less significant cryptocurrency enterprise in the form of a custody product – which would enable solely big investors some possibility to invest in cryptocurrency.
The crypto market did not take the news lightly.
As you can see in the chart above, the total cryptocurrency market capitalization has dropped by nearly $40 billion from about $239 billion to around $200 billion – an unrelenting cataclysmic 16% fall so far (August 6).
The propitious prospect of a cryptocurrency trading desk by one of Wall Street’s most eminent historic dwellers – initially sparked in December 2017 – was certainly a huge source of optimism in the crypto market. Not every day a monumental traditional financial establishment such as Goldman Sachs embraces cryptocurrency so warmly; yet, it seems that the previous hopeful expectation has transformed into bitter disappointment.
What so fascinating is that digital currencies such as Bitcoin were initially created and released as a response to the collapse of the traditional financial system in 2008 (Bitcoin was first released in 2009); the goal was – and still mostly is – to offer a decentralized digital currency to constitute as an alternative to the old, corrupt and heavily controlled conventional economy. Today, paradoxically, with the undisputed success of Bitcoin – which was followed by additional popular cryptocurrencies – the crypto market appears to desperately seek the approval of the old economic establishment.