As traditional financial firms increasingly explore the integration of stablecoins into their operations, Goldman Sachs has made a bold prediction: the stablecoin sector could soon reach valuations in the trillions. This optimism comes on the heels of significant regulatory developments, most notably the recent introduction of the GENIUS Act, which aligns state and federal frameworks for stablecoin regulation. ‘Stablecoin Gold Rush’ US Treasury Secretary Scott Bessent expressed confidence in the role of stablecoins, suggesting they could significantly boost the market for US Treasuries. According to a report from the Financial Times, Bessent has indicated that the government may increase the sale of short-term debt to meet the anticipated demand for these cryptocurrencies. Related Reading: Expert Touts Chainlink Advantage Over XRP In Institutional Adoption Race Goldman Sachs views this moment as the dawn of a “stablecoin gold rush.” In a recent research paper authored by Will Nance and his team, the bank noted that the global market for stablecoins currently stands at approximately $271 billion. They anticipate significant growth, particularly for Circle’s USD Coin (USDC) stablecoin, which they believe will gain market share both on and off the Binance platform. The report estimates that USDC could see an impressive $77 billion increase, representing a compound annual growth rate (CAGR) of 40% from 2024 to 2027. The Potential Impact Of Dollar-Pegged Cryptocurrencies The potential market for stablecoins is vast, with Goldman Sachs highlighting that Visa estimates the addressable market for payments at around $240 trillion in annual payment volume. Consumer payments alone account for about $40 trillion, while business-to-business (B2B) payments and person-to-person (P2P) transactions make up the remainder. The unique structure of stablecoins—requiring them to be backed one-to-one with US dollars or government bonds—means that each stablecoin issued directly increases demand for the bonds that back them. Some market analysts believe this approach will have a profound impact on the bond market, particularly for short-dated bonds, which often yield low interest rates. Related Reading: Shiba Inu Takes Major Step With Community Governance Model — Details A research paper from the Bank for International Settlements also supports Goldman Sach’s view, suggesting that significant inflows into the stablecoin market could lower three-month Treasury yields by 2 to 2.5 basis points within a short time frame. However, the bank’s paper also notes that the effects of stablecoin outflows are disproportionately greater, causing yields to rise by two to three times as much. Amid significant regulatory progress from the Trump administration, including the passage of the GENIUS Act for stablecoins, the CLARITY Act, and the Anti-CBDC bill, there have been increased inflows in the broader crypto market. Significant capital has entered Bitcoin and Ethereum exchange-traded funds (ETFs), and there is a new trend of adopting cryptocurrencies as treasury reserves. These factors have led to a new all-time high in total crypto market capitalization of $4.17 trillion. As of this writing, the figure has dropped to $3.81 trillion, as the market’s largest cryptocurrencies have led the correction witnessed since last week. Featured image from DALL-E, chart from TradingView.com
To capitalize on the growing interest in the crypto industry, banking giant Goldman Sachs is preparing to enter the tokenization sector, with three offerings expected to launch later this year. Goldman Sachs Aims To Capitalize On Tokenization Trend According to a Fortune report, Mathew McDermott, Global Head of Digital Assets at Goldman Sachs, revealed the bank’s intentions to expand its crypto offerings, focusing on the tokenization sector. Tokenization involves issuing “real-world assets,” such as money market funds and real estate holdings on public blockchains such as Ethereum or Solana, leading the bank to plan to launch three tokenization projects by the end of the year in partnership with major clients, including its first project in the United States. Related Reading: Floki Inu To Build Schools In India, FLOKI Price Seen Hitting $17 While other financial institutions, such as BlackRock, launched its first tokenized fund on the Ethereum blockchain in March, McDermott emphasized that success depends on creating products that investors want. To that end, Goldman Sachs recently hosted a digital asset summit in London attended by more than 500 clients. During the Summit, McDermott emphasized the importance of providing investors with these solutions that can “fundamentally” change asset management strategies, stating, “There’s no point in doing it just for the sake of it. According to the report, Goldman Sachs’ views on crypto differ within the institution. McDermott acknowledged that varying perspectives are expected within an institution of their size. While Sharmin Mossavar-Rahmani, CIO for Goldman Sachs, voiced skepticism about crypto as an investment asset class, McDermott emphasized the bank’s active involvement in crypto from an institutional perspective, including trading cash-settled crypto derivatives on behalf of clients and their participation in the recently approved ETF markets. Crypto Opportunities Ahead Of US Presidential Election As BlackRock successfully launched its treasury fund, BUIDL, on the Ethereum blockchain, it has garnered significant attention; McDermott noted that Goldman Sachs primarily targets institutional clients and intends to work exclusively with private blockchains due to “regulatory constraints.” Although McDermott refrained from disclosing specific details about the upcoming tokenization projects set to debut this year, he revealed that one project would focus on the US fund complex. At the same time, another would center around debt issuance in Europe. Related Reading: Ethereum Rising, 2 Million Addresses Will Be In Money If $3,200 Is Broken Looking ahead, with the US presidential election and the potential for a shift in the government’s regulatory stance on crypto on the horizon, McDermott believes that Goldman Sachs’ opportunities in the space could expand further. This could include activities like holding spot crypto assets and exploring execution and sub-custody services, subject to approval. As of this writing, the largest cryptocurrency on the market, Bitcoin (BTC), was trading at $57,580, presenting a slight decrease of 0.5% in the 24-hour time frame, aiming to consolidate above this level. Featured image from DALL-E, chart from TradingView.com
Analysts at Goldman Sachs, a leading global banking and investment management firm, have offered valuable insights into the anticipated effects of the forthcoming Bitcoin halving, on the price of the cryptocurrency. They emphasize that while the Bitcoin halving is a noteworthy event, other major factors will likely exert greater influence on Bitcoin’s future value. Bitcoin Halving To Play Lesser Role In BTC’s Outlook In a note to clients, Goldman Sach’s analysts have cautioned against reading too much into the past Bitcoin halving cycles and their impact on the cryptocurrency. Based on historical trends, the Bitcoin halving cycles tend to have a favorable effect on the value of Bitcoin, often triggering a bull run. The bank noted that whether the Bitcoin halving scheduled for April 20, becomes a “buy the rumor, sell the news event,” it would hold less significance for the cryptocurrency’s medium-term outlook. They argue that the future performance of the pioneer cryptocurrency would be more heavily influenced by the supply and demand dynamics within the current market. Additionally, the analysts highlighted that the growing interest and demand for Spot Bitcoin Exchange Traded Funds (ETFs) combined with the self-reflexive nature of the crypto market would be the primary contributing factor to Bitcoin’s price action and future outlook. Sharing a similar perspective, analysts at CryptoQuant disclosed earlier in April that the 2024 Bitcoin halving was no longer a primary catalyst for Bitcoin’s bullish surge. They highlighted that factors such as increasing demand from large-scale investors and diminishing supply were now the key drivers of Bitcoin’s upward momentum. Analysts Warn Of Macroeconomic Influence On New Halving Cycle Analysts at Goldman Sachs have predicted that macroeconomic factors such as inflation could have a significant influence on the upcoming Bitcoin halving event. “Caution should be taken against extrapolating the past cycles and the impact of halving, given the respective prevailing macro conditions,” Goldman Sachs analysts noted. Related Reading: Crypto Analyst Says Don’t Buy Altcoins Just Yet – Here’s Why Unlike previous halving cycles, the present economic conditions display high inflationary pressures and interest rates, which could cause the 2024 Bitcoin halving cycle to diverge from historical patterns. In other words, the analysts have suggested that for Bitcoin’s historical halving bull runs to occur, macro conditions need to be supportive of investor risk-taking. Currently, the United States faces challenges with high inflation, while interest rates stand above 5%. These conditions may exert pressure on Bitcoin’s market dynamics. However, despite the prevailing circumstances, many see the digital currency as a formidable inflation hedge and a beacon of hope against escalating inflationary pressures. BTC price at $62,000 | Source: BTCUSD on Tradingview.com Featured image from CryptoSlate, chart from Tradingview.com