• FTX insolvency shakes entire crypto industry
• Goldman Sachs sees growth in crypto investors
• Cheaper crypto company valuations as a buying opportunity
The crypto market has plummeted this year. Bitcoin and Co. are now a long way from their record highs reached at the end of 2021. In recent weeks, it was the insolvency of FTX in particular that caused great turbulence: After reports of the secret transfer of deposits at the beginning of November caused doubts about FTX’s capital reserves, alarmed FTX customers withdrew billions of dollars in capital. FTX could not cover this sum and so Sam Bankman-Fried, the founder of FTX and at the time also CEO of the company, had to file for Chapter 11 bankruptcy protection in the USA on November 11th.
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Since FTX was one of the largest crypto exchanges in the world, its bankruptcy has severely shaken the entire crypto market and caused other companies severe distress as well. No wonder, after all, the new company management assumes that FTX has accumulated debts totaling over ten billion US dollars with over one million customers.
FTX bankruptcy winner
But there are also companies that benefit from the FTX insolvency. One of them could be the investment bank Goldman Sachs, which has been offering its customers trading in crypto options and derivatives via its own trading desk since 2021. Since the FTX collapse, the number of financial institutions wanting to trade there has actually increased, revealed Mathew McDermott, head of digital assets at Goldman Sachs, in an interview with the news agency “Reuters”. He suspects many of these have been with FTX before, but he can’t say for sure. Basically, the FTX implosion has increased the need for more trusted, regulated cryptocurrency players and big banks are now seeing an opportunity to boost deals, the manager said.
Goldman Sachs sees opportunities
Meanwhile, Goldman Sachs itself senses an opportunity for bargain purchases given the depressed valuations. While the FTX collapse undoubtedly dampened market sentiment, the crypto technology behind it continues to work well, said Mathew McDermott, explaining the continued interest of his bank, which has invested in at least 11 crypto companies in the past.
“We’re seeing some really interesting opportunities at a much more reasonable price,” McDermott told Reuters. As he further explained, Goldman Sachs is already conducting due diligence reviews – i.e. a careful analysis of the economic, legal, tax and financial conditions – on various crypto companies with a view to potentially investing in them or even acquiring them outright. The manager did not reveal which companies are involved, but “Reuters” reported that the investment bank wanted to invest tens of millions of US dollars.
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