Goldman Sachs, the CBOE, Standard Chartered, and other financial institutions participated in the pilot of the Canton Network, a protocol aiming to achieve interoperability in apps using resources from various blockchains. Digital Asset, the company behind the pilot, stated that this test showed the opportunity to reduce costs, risk, and inefficiencies by using this kind […]
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Goldman Sachs Reevaluates Coinbase, Eyes Neutral Stance Amid Crypto Surge
In a significant shift, Goldman Sachs has upgraded its rating on Coinbase shares from selling to neutral, citing a surge in crypto prices and record-breaking daily volumes. The adjustment to a 2 price target reflects the bank’s reassessment of the San Francisco-based crypto exchange’s revenue potential and operational strides toward profitability. Goldman Sachs Shifts Gears: […]
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Goldman Sachs Exec Predict Massive Growth For Digital Assets In 2024
Head of Digital Assets at Goldman Sachs, Matthew McDermott, has projected a massive growth in the cryptocurrency market in 2024. McDermott shared these positive predictions in a recent interview with Fox Business, expressing much optimism in the future of digital assets.
Goldman Exec Expects Spot ETFs To ‘Gradually’ Boost Institutional Demand For Crypto Assets
Speaking to Fox Business, McDermott has backed the continuous growth of cryptocurrencies as he foresees a rise in the institutional adoption of these assets.
Notably, the Goldman executive shares popular sentiment with many crypto enthusiasts that the approval of a Bitcoin or Ethereum spot ETF will open up the digital asset ecosystem to more institutional investors who are weary of the market volatility attached to direct crypto investments.
McDermott said:
One, it broadens and deepens the liquidity in the market. And why does it do that? It does that because you’re actually creating institutional products that can be traded by institutions that don’t need to touch the bare assets. And I think that, to me, that opens up the universe of the pensions, insurers, etc.
However, McDermott has cautioned crypto enthusiasts against expecting a sudden impact of crypto spot ETFs. He believes the anticipated increased demand and price rise will be a gradual process that will occur over the course of 2024.
The US Securities and Exchange Commission (SEC) is expected to grant approval orders to several Bitcoin spot ETF applications in the coming weeks following discussions between the regulator and multiple asset managers. Bloomberg analyst Eric Balchunas has set a potential decision window of January 8 – January 10, stating there is a 90% chance the SEC finally delivers a verdict on these various applications putting an end to the 6-months chronicle.
Asset Tokenization In 2024
In addition to potential crypto spot ETFs, McDermott also mentioned a potential increase in commercial blockchain application as another contributing factor to his projected rise in institutional demand for digital assets.
Particularly, he spoke about an improvement in existing tokenization systems, which can lead to the creation of secondary liquidity on blockchains.
He said:
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.”
At the time of writing, the entire crypto ecosystem is valued at .602 trillion, with a 15.09% gain in the last month. The market’s leader Bitcoin currently trades at ,082, having declined by 1% in the past day.
Goldman Sachs: Don’t Expect Immediate BTC Spike After Spot Bitcoin ETF Approvals
Global investment bank Goldman Sachs has advised investors against anticipating a sudden and immediate surge in the price of bitcoin upon the approval of spot bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC). Nonetheless, Goldman Sachs highlighted that the “ability to actually transact a product that people are familiar with and can provide scale” is “very positive.”
Goldman on Spot Bitcoin ETF Hype
Global investment bank Goldman Sachs does not anticipate an immediate surge in BTC prices following the approval of spot bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC), Mathew McDermott, head of the digital asset unit at Goldman Sachs, told Reuters this week.
While emphasizing that he does not expect the approval of the ETF to trigger a “sudden immediate spike in liquidity and price,” the Goldman head of digital assets said it could attract new institutional investors to the asset class. He opined:
This ability to actually transact a product that people are familiar with and can provide scale, I think is very positive.
Goldman Sachs offers cryptocurrency derivatives trading for institutional clients within the bank’s FX desk, McDermott explained, adding that the team does not trade the underlying asset itself.
According to McDermott, the investment bank has also observed growing client interest in crypto derivatives trading, driven by market expectations for the imminent approval of spot bitcoin ETF applications by the SEC. While noting that crypto is “still a very, very, very small market,” he stated:
Definitely as the market’s getting more excited about the potential of a bitcoin ETF, there’s definitely been more interest.
McDermott further shared that he is focused on developing digital assets beyond cryptocurrency. This includes exploring the issuance of blockchain-based tokens representing traditional assets like bonds. He highlighted a “huge appetite” for digital assets, emphasizing that it has “grown significantly” in the last 12 months. Moreover, he noted that leveraging blockchain technology could enhance operational and settlement efficiencies, as well as contribute to the “de-risking” of financial markets.
The Goldman head of digital assets opined: “Probably within the next one to two years you’ll see a big significant uptick in the quantum trading on-chain, probably three to five years to really see these marketplaces at scale.” However, he believes that fully replicating the majority of financial markets exclusively on blockchain is a distant prospect.
Do you agree with Goldman Sachs’ head of digital assets? Do you anticipate a significant increase in BTC prices upon SEC approval of spot bitcoin ETFs? Let us know in the comments section below.
Goldman Sachs Expects Fed to Start Cutting Interest Rates in Q2 Next Year
Goldman Sachs has predicted that the Federal Reserve will start cutting interest rates in the second quarter of next year. The global investment bank’s economists also expect the Fed officials to forego hiking rates at their upcoming meeting. “We are penciling in 25 basis points of cuts per quarter but are uncertain about the pace,” Goldman said.
Goldman Sachs’ Interest Rate Cut Prediction
Global investment bank Goldman Sachs has predicted that the Federal Reserve will start cutting interest rates in Q2 next year. Goldman economists, including Jan Hatzius and David Mericle, detailed in a note Sunday:
The cuts in our forecast are driven by this desire to normalize the funds rate from a restrictive level once inflation is closer to target, not by a recession.
“Normalization is not a particularly urgent motivation for cutting, and for that reason, we also see a significant risk that the FOMC will instead hold steady,” the economists described. They noted:
We are penciling in 25 basis points of cuts per quarter but are uncertain about the pace … We expect the funds rate to eventually stabilize at 3%-3.25%.
Goldman Sachs is not the only one forecasting a rate cut in the second quarter of 2024. Bank of America, for example, said in June that it expects the Fed to begin cutting interest rates in May next year.
Regarding further interest rate hikes, the Goldman economists anticipate that the Fed will not raise interest rates at its upcoming Federal Open Market Committee (FOMC) meeting next month. They expect Federal Reserve officials to come to the conclusion at their November meeting “that the core inflation trend has slowed enough to make a final hike unnecessary.” The Fed’s aggressive campaign to combat inflation has pushed the benchmark interest rate to 5.25% to 5.5%, the highest level since 2001.
Fed governors, including Michelle Bowman, believe that additional interest rate hikes may be needed to get inflation on a path down to the Fed’s 2% target. Federal Reserve Chairman Jerome Powell said after the Fed’s latest rate hike that prevailing economic conditions suggest that monetary policy will likely need to be restrictive for longer, emphasizing: “We’re prepared to further tighten if that’s appropriate.”
Do you agree with Goldman Sachs’ economists that the Federal Reserve will start cutting interest rates in the second quarter of next year? Let us know in the comments section below.
Goldman Foresees Q2 2024 Fed Rate Cut: A Boost For Bitcoin?
In a recent note that has caught the attention of both traditional financial markets and the Bitcoin community, Goldman Sachs economists, including the renowned Jan Hatzius and David Mericle, have made a significant prediction regarding the Federal Reserve’s monetary policy. The note suggests that the Federal Reserve may commence a series of interest rate cuts by the end of June 2024.
“The cuts in our forecast are driven by this desire to normalize the funds rate from a restrictive level once inflation is closer to target,” the Goldman economists wrote. This statement underscores the bank’s belief that the Federal Reserve’s current stance on interest rates may be too restrictive, especially if inflation rates continue to trend towards the central bank’s target.
The note further elaborates: “Normalization is not a particularly urgent motivation for cutting, and for that reason we also see a significant risk that the FOMC will instead hold steady.” This cautious tone suggests that while Goldman Sachs is predicting a rate cut, they also acknowledge the unpredictability of the Federal Reserve’s decisions.
The recent data, which showed US inflation rising at a slower-than-expected rate of 3.2%, with the core consumer price index at a 4.7% annual pace, further complicates the picture. With the Fed’s benchmark rate currently set between 5.25% to 5.5%, Goldman Sachs expects it to stabilize around 3 to 3.25%.
What Does This Mean For Bitcoin Price?
Expectations of a rate cut from Goldman Sachs are in line with market expectations according to the CME FedWatch Tool. In May 2024, 68% already expect there to be at least a 25 basis point (bps) rate cut.
However, it remains to be seen whether macro events will influence the Bitcoin price again. In the last few months, BTC increasingly decoupled from macro events while the stock market rallied towards all-time highs and stagnated around the ,000 mark.
Interestingly, the timing could be very positive for the Bitcoin market. On the one hand, March 15, 2024 is the final deadline for spot Bitcoin ETF filings from BlackRock, Fidelity, Investco, VanEck, and WisdomTree; on the other hand, Bitcoin halving is coming up at the end of April (currently expected on April 26).
The high expectations for these two events, coupled with a dovish monetary policy from the Federal Reserve, could be a massive catalyst for the Bitcoin price.
At press time, BTC traded at ,426 and saw another calm weekend amid the liquidity summer drought. Breaking above ,550 is key to establish any bullish momentum to initiate another push towards ,000.
India Poised to Leapfrog Major Economies, Becoming World’s Second-Largest by 2075, Goldman Sachs Report Predicts
In a recent report, Goldman Sachs Research details that India is set to outpace Japan, Germany, and the U.S. to become the world’s second-largest economy by 2075. The financial institution’s researchers predict a dramatic expansion in India’s gross domestic product.
Economic Shift: Goldman Sachs Predicts India’s Ascent to World’s No. 2 Economy
In a report titled “How India Could Rise to the World’s Second-Biggest Economy,” Santanu Sengupta, an economist with Goldman Sachs Research, projects substantial expansion for India’s economy. The report forecasts a surge in India’s gross domestic product, making it the world’s second-largest economy by 2075.
This growth is largely credited to India’s advantageous demographic makeup, balancing its working-age population and those too young or old to work. The study indicates that the key for India is to boost labor force participation and offer ample training and skill development opportunities.
“Over the next two decades, the dependency ratio of India will be one of the lowest among regional economies,” Sengupta detailed. “India has made more progress in innovation and technology than some may realize,” the economist added.
The Goldman report asserts that India has seen significant growth in innovation, technology, and worker productivity. In economic terms, this suggests higher output for each labor and capital unit. The report also emphasizes that capital investment, driven by expected savings increases due to falling dependency ratios, rising incomes, and financial sector development, will be instrumental in fueling growth.
“Given healthy balance sheets of private corporates and banks in India, we believe that the conditions are conducive for a private sector capex cycle,” Sengupta notes.
The economist indicates that the primary challenge and risk to India’s economic growth forecast is productively engaging the labor force. Sengupta asserts that this involves creating job opportunities and enhancing job-related skills. The upside growth potential lies in digitizing the economy. The bank’s researcher cites Aadhaar, the world’s largest biometric ID system, which Sengupta claims has improved public service delivery and expanded access to credit.
Lastly, the report underscores India’s domestic demand-driven economy, the influence of global commodity prices, and the country’s energy needs as crucial factors in understanding its economic landscape. India currently holds the position of the world’s fifth-largest economy, and Goldman’s researchers posit that “India’s savings rate is likely to increase.”
Goldman’s examination of India follows commentary from British economist Lord Jim O’Neill, who conceived the acronym BRIC. O’Neill discussed de-dollarization and anticipates the Chinese yuan and the Indian rupee will become “much more important currencies for the world.”
What do you think about the Goldman Sachs Research report about India’s economy? Share your thoughts and opinions about this subject in the comments section below.
Goldman Sachs: Markets Too Optimistic About Inflation Cooling
Goldman Sachs’ strategists have cautioned that markets seem to be more optimistic than they are about the pace of inflation’s decline. “Although we expect further declines in inflation going forward, markets appear considerably more optimistic than we are about the pace of cooling,” they explained.
Goldman Sachs Expects U.S. Inflation to Decline Slower Than Market Anticipates
Goldman Sachs’ strategists, led by chief interest rates strategist Praveen Korapaty, warned in a note Friday that inflation in the U.S. is projected to decrease at a slower pace than what is currently being priced by the markets, Bloomberg reported.
The Goldman strategists explained that investors may be assuming that a sharp slowdown in economic growth would result in a more rapid decline in inflation. Moreover, they could also be more bearish about energy prices compared to what is implied by commodity futures. However, the strategists argued that these factors will have a limited impact on inflation, emphasizing that markets are additionally ignoring the potential for “delayed-onset inflation” in sectors like healthcare. They wrote:
Although we expect further declines in inflation going forward, markets appear considerably more optimistic than we are about the pace of cooling.
The Federal Reserve paused raising interest rates after 10 consecutive rate hikes at their Federal Open Market Committee (FOMC) meeting last week. Their decision followed the U.S. Bureau of Labor Statistics (BLS) reporting that inflation had cooled from 4.9% to 4% in May — the smallest 12-month increase since March 2021. However, core inflation remains elevated at 5.3%.
While many people expect the Federal Reserve to start cutting interest rates soon, Fed Chair Jerome Powell said at a press conference Wednesday that while “it will be appropriate to cut rates at a time when inflation is coming down really significantly, we’re talking about a couple years out.”
Do you agree with Goldman Sachs about inflation in the U.S.? Let us know in the comments section below.
Treasury Secretary Yellen Insists US Could Default on June 1 — Goldman Sachs Estimates ‘Real Deadline’ Is a Week Later
U.S. Treasury Secretary Janet Yellen has insisted that the U.S. could default on its debt obligations on June 1. “I think that’s a hard deadline,” she stressed. Meanwhile, global investment bank Goldman Sachs has estimated that the “real deadline” for a possible U.S. default is “more like” June 8-9.
Yellen and Goldman Sachs on U.S. Default, Debt Ceiling
U.S. Treasury Secretary Janet Yellen reiterated her concerns about a possible U.S. default on NBC’s “Meet the Press” Sunday. Responding to a question about the June 1 deadline for a possible U.S. default, she said:
I indicated in my last letter to Congress that we expect to be unable to pay all of our bills in early June and possibly as soon as June 1. And I will continue to update Congress, but I certainly haven’t changed my assessment. So I think that’s a hard deadline.
However, the U.S. government is expecting some tax payments on June 15 which would provide some revenue. When asked about the likelihood the U.S. could get to June 15 “to avoid breaching the debt ceiling,” Yellen said: “There’s always uncertainty about tax receipts and spending. And so it’s hard to be absolutely certain about this, but my assessment is that the odds of reaching June 15th, while being able to pay all of our bills, is quite low.”
Commenting on “extraordinary measures” that President Joe Biden could take to resolve the debt ceiling issue in Congress, Yellen said: “There has been much discussion of the 14th Amendment. And, as President Biden said … it doesn’t seem like something that could be appropriately used in these circumstances, given the legal uncertainty around it, and given the tight timeframe we’re on. So my devout hope is that Congress will raise the debt ceiling.”
Yellen noted:
My assumption is that if the debt ceiling isn’t raised, there will be hard choices to make about what bills go unpaid.
Global investment bank Goldman Sachs, however, predicts that the U.S. could default on its debt obligations approximately one week after June 1. Alec Phillips, Goldman Sachs’ chief political economist, told Bloomberg TV on Friday: “The reality is that Congress has to do this at some point very soon, and they should just go ahead and do it … So waiting for the last minute isn’t necessarily the right move, even though we think that maybe they could go a little bit longer.”
The Goldman Sachs economist shared:
Our guess right now is that the real deadline is probably more like June 8th, 9th, that’s when they’re at sort of greatest risk.
The Congressional Budget Office (CBO) recently said that there is a significant risk of the U.S. defaulting in the first two weeks of June.
Many people have warned that the U.S. defaulting on its debt obligations will have catastrophic consequences, including a global financial crisis. Top executives of 146 major companies in the U.S. have urged Biden and congressional leaders to act swiftly to prevent a U.S. default, warning of “disastrous consequences.” Moreover, some believe that a U.S. default would risk the dollar’s reserve currency status.
Do you think the U.S. will default on its debt obligations in June? Let us know in the comments section below.
Goldman Sachs, Yellen Warn of US Default’s ‘Catastrophic Consequences’ — ‘There Is Real Risk to US Dollar’
A Goldman Sachs executive who also serves as the chair of a Treasury advisory committee has warned that a U.S. default poses “real risk to the U.S. dollar.” She stressed: “Anything that moves us away from being viewed as the world’s reserve currency, of being the safest most liquid asset in the world, is bad for the American people, bad for the dollar, and bad for the U.S. government.”
Goldman Sachs Agrees With Treasury Secretary Yellen on US Default Risks
Goldman Sachs executive Beth Hammack warned about the risks of the U.S. defaulting on its debt obligations in an interview on Bloomberg Television Tuesday. Hammack is co-head of Goldman Sachs’ Global Financing Group within the Investment Banking Division (IBD) and a member of the firm’s Management Committee. She also serves as the chair of the U.S. Treasury Department’s Borrowing Advisory Committee.
Regarding a possible U.S. debt default, she said: “This is a conundrum for all international investors. They don’t understand why we’ve made these appropriations and we’re not willing to pay the bills that we already agreed we would pay. And so I think that’s really confusing.”
The Goldman Sachs executive warned, “I think there is real risk to the U.S. dollar as we leave this in a more protracted state of negotiations,” emphasizing:
Anything that moves us away from being viewed as the world’s reserve currency, of being the safest most liquid asset in the world, is bad for the American people, bad for the dollar, and bad for the U.S. government.
The chair of the Treasury Borrowing Advisory Committee proceeded to explain that the dislocations being created in the U.S. Treasury bill markets are “inefficient” and they “create extra cost for the taxpayers.”
The Treasury bill markets began factoring in the risks of the U.S. defaulting on its debt obligations from next month onward after Treasury Secretary Janet Yellen and the Congressional Budget Office warned that the Treasury may not be able to pay all of the government’s bill in early June.
The Goldman Sachs executive said she agreed with Treasury Secretary Yellen that the U.S. defaulting on its debt obligations would have “catastrophic consequences for the U.S. economy.” Moreover, she cautioned that there would be “a huge ripple effect” if the Treasury stops making some payments.
On Tuesday, Yellen said at a press conference ahead of a G7 meeting in Japan that a default would “risk undermining U.S. global economic leadership and raise questions about our ability to defend our national security interests.”
A lawmaker said this week that a default poses risks to the U.S. dollar’s reserve currency status. Federal Reserve Chairman Jerome Powell has also warned of “uncertain and adverse consequences” from the U.S. defaulting on its debt obligations.
What do you think about the Goldman Sachs executive’s warning? Let us know in the comments section below.