The news might have caused some investors to lose confidence in the digital assets as the imprimatur of Goldman Sachs was giving them more confidence in their decision to hold on to the cryptocurrencies. Alternatively, it could be that some investors were expecting the Bitcoin prices to start increasing again once the bank opened its trading desk and the reports forced them to abandon the hope. In addition, the decision whether to hold or sell such assets usually depends on the investors’ expectations of how the rest of the market will behave and some investors thought, and rightfully so, that the prices would go crumbling down. In the latter case, the effects could be short-lived as even a small sign in the positive direction could lead the prices to recover again.
Goldman Sachs hasn’t yet confirmed the reports, but the representatives from the company pointed out that some of the processes are out of their hands and there are outside factors that decide whether Goldman is able to deal with cryptocurrencies or not. These comments refer to the regulations that often disallow financial institutions to handle these highly volatile virtual currencies. Since the Great Recession of 2008, the US government has taken a more strict approach with the systemically important institutions, the failure of which could send the whole economy into a recession once more. Since cryptocurrencies are highly volatile and carry a lot of risk, it shouldn’t come a surprise that large banks are not allowed to deal with these assets. “In response to client interest in various digital products, we are exploring how best to serve them in the space. At this point, we have not reached a conclusion on the scope of our digital asset offering,” – said the company in response to the reports.