Goldman Sachs has predicted that the crypto market will grow considerably in 2024 with the influx of traditional financial institutions.
According to Goldman Sachs’s head of digital assets, businesses have witnessed the efficiency of the blockchain and are now scaling to maximize commercial opportunities.
Crypto Market Poised For Growth
Mathew McDermott, the head of digital assets at Goldman Sachs, has predicted that the crypto market will see considerable growth in 2024 as more commercial applications of blockchains emerge. He stated that regulations will also play a crucial role in facilitating their use in investment applications. McDermott added that one of the most significant developments in the digital asset ecosystem was the steady influx of traditional financial institutions over the past year.
He added that this influx has occurred amidst growing acceptance that digital assets can create efficiencies, de-risk, and positively impact how business models and businesses operate. According to McDermott, this has also been aided by the increased regulatory clarity surrounding crypto across the globe.
McDermott also stated that digital assets have reached a stage where there is greater acceptance of the technology and how it works. This has allowed the market to focus on building out and creating scale. According to him, this is where we would really begin to see the commercial value proposition come to fruition.
Views On Tokenization
McDermott also predicted that traditional assets would be tokenized ahead of their more exotic counterparts. Rare assets will see the most liquidity, pricing, and transparency benefits.
“When I think about tokenization, which is obviously a topic that’s kind of talked about quite extensively, I think for me, next year, what we’ll start to see is the development of marketplaces. So where we start to see scale adoption, particularly across the buy side in the context of investors, and that’s because we’ll start to see the emergence of secondary liquidity on chain, and that’s a key enabler. So, for me, that’s one of the key developments for next year.”
McDermott also predicted that increased adoption of the technology would help enhance collateral mobility by solving problems rooted in the financial plumbing of the market. The executive explained,
“When you look at collateral mobility, there’s still a lot of inefficiencies that are a function of systems that are many decades old. That could be a kind of custody fragmentation, the lack of synchronization of settlement, and often the inefficient use of capital and liquidity. And so, as you kind of play that through and this is what I fully expect for next year is – when you actually start to see people adopt the technology, they’ll recognize that not only can you see a commercial proposition on the forward, you can actually see it today.”
ETFs To Grow Gradually
McDermott stated that growth in 2024 will initially be focused on more vanilla asset classes before spreading to more opaque asset classes by the end of the year.
“I fully expect a significant growth in adoption from the buy side next year. Then I think probably towards the latter end of the year, probably the following and beyond. You’ll start to see kind of a focus on some of these more opaque asset classes where the value proposition probably is kind of greater just purely because of the opaqueness in pricing, probably less liquidity and most transparency.”
McDermott also spoke about Spot Bitcoin ETFs and stated that their approval could invite investments by pension funds and insurers. This, according to McDermott, would significantly improve Bitcoin’s overall liquidity. The United States Securities and Exchange Commission has until 10th January 2024 to rule on the ARK Invest application. Market watchers expect the SEC to approve all 13 applications and ARK’s to ensure fair competition. However, the Goldman Sachs executive predicted that the Bitcoin ETFs may not grow immediately upon approval. Rather, he predicted them to gain traction as the year progresses.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
