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Goldman Sachs has shelved its Bitcoin (BTC) trading desk causing a mini-meltdown across the cryptocurrency market.

People familiar with the matter told Business Insider the investment bank scrapped plans to set up a desk to trade physical cryptocurrencies. Sources suggested that Goldman Sachs executives had been concerned about the lack of regulatory certainty.

“People in the crypto market have been very excited for updates from Wall Street over the last year”, said Mati Greenspan, the senior market analyst at eToro. “Any type of news that could damage that perception will cause prices to move a bit”.

As expected, the immediate reaction from the markets has not been good. Since Business Insider published their article earlier today, the crypto market has fallen by $15bn. Almost every coin has experienced a price drop at the time of writing; Bitcoin is down by nearly 5%, Ether (ETH) by over 10% and XRP by 9%.

The lead advocate for Bitcoin Cash (BCH), Roger Ver, told Crypto Briefing that although today’s news was important and would demoralize the community, in the long run he didn’t find it very significant. “It’s not that big of a deal”, he said. “Goldman didn’t have a crypto trading desk yesterday and we were ok.” 

Ver said that people interested in investing in cryptocurrency normally look to the big financial firms and institutions to make the first move. “If Goldman Sachs had set up a trading desk it would have added legitimacy and people would have been more comfortable with that,” he said.

Wall Street has a big influence over the cryptocurrency sector. When Cboe first launched Bitcoin futures back in December, an already bullish market shot up even more; BTC went up by nearly $5,000 at the news.

The market reaction mirrors a similar reaction after the SEC’s postponed its ruling on the Cboe BZX application for a Bitcoin ETF. The sector had been building up in anticipation for the decision, which if approved, would greatly increase cryptocurrency’s exposure for institutional investors. Over $60bn was wiped from crypto’s market cap when the news broke; Bitcoin fell below $6,000.

Although Goldman Sachs has so far yet to comment on the matter, it has likely not completely turned its back on cryptocurrency. Sources suggest it is currently exploring a custody product for the bank to hold and track its clients’ cryptocurrency holdings.

Some have suggested that custodial services, offered by reputable and trusted businesses, would be the first step for greater institutional involvement. The popular cryptocurrency exchange Coinbase launched its own custodial service back in early July.

Although the market is currently awash with red, data suggests cryptocurrency trading volatility is still well within the normal parameters.

“A 5% movement in bitcoin is not really a big deal; we’re still smack dab in the middle of the range that we’ve been looking at over the last few months”, said Greenspan.

Goldman Sachs was one of the early-stage investors for Circle, suggesting the investment bank has had a longstanding interest in cryptocurrency. A drop in the price could present an opportunity for institutional investors, looking to buy big, to accumulate large volumes of cryptocurrency at a much smaller markup than if market fortunes were different.

The author is invested in BTC and ETH, which are mentioned in this article. 

The post Goldman Sachs Folds Weak Hand – No Big Deal, Says Ver appeared first on Crypto Briefing.

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