Goldman Sachs Predicts Future of Digital Assets
Goldman Sachs, one of the world’s leading investment banks, has made a bold prediction about the future of digital assets. According to Matthew McDermott, the bank’s head of digital assets, institutional adoption and regulation of blockchains will mature digital assets by the year 2024. McDermott believes that businesses that have experienced blockchain’s efficiency are now scaling up to maximize commercial opportunities.
McDermott argues that the positive impacts of blockchain technology on businesses are only fully realized at scale. As more banks and institutions adopt and integrate blockchain into their operations, he expects liquidity in the markets for tokenized assets to improve significantly. This will create more opportunities for businesses to leverage blockchain technology for various use cases.
Blockchain’s Impact on Businesses Only Realized at Scale, Says Goldman Sachs
McDermott highlights that the current inefficiencies in collateral mobility are a result of systems that are several decades old. However, as more businesses adopt blockchain technology, they will discover not only the future potential of the technology but also the immediate benefits it provides. The adoption of blockchain technology will enable businesses to unlock commercial propositions and enhance their operations in real-time.
Tokenization to Benefit Less Common Assets, According to Goldman Sachs Executive
McDermott predicts that traditional assets will be tokenized before their more exotic counterparts. Tokenization refers to the process of converting physical or digital assets into blockchain tokens. With tokenization, less common assets will benefit the most in terms of liquidity, pricing visibility, and transparency. This will open up new avenues for investors and businesses to participate in previously untapped markets.
This sentiment aligns with the views of William Quigley, co-founder of the blockchain platform WAX, who expects the tokenization industry to build its niche in 2024 before maturing in 2030. The tokenization of assets is expected to revolutionize various industries, including real estate, art, and collectibles.
Slow Growth Expected for Bitcoin ETFs, Says Goldman Sachs
In the meantime, McDermott suggests that the approval of Bitcoin exchange-traded funds (ETFs) will have a slow start but eventually gain traction. ETFs are investment vehicles that track the price of Bitcoin and allow investors to gain exposure to the cryptocurrency without actually owning it. The approval of Bitcoin ETFs is expected to attract investments from pension funds and insurers, which will significantly improve Bitcoin’s overall liquidity.
The US Securities and Exchange Commission (SEC) currently has until January 10, 2024, to rule on an ETF application by ARK Invest. Analysts anticipate the SEC to approve all thirteen applications to ensure fair competition in the market.
Goldman Sachs Expects Bitcoin ETFs to Gain Traction in 2024
McDermott predicts that even after the approval of Bitcoin ETFs, their growth will not be immediate. However, as the year progresses, he expects these ETFs to gain traction and become more widely adopted. This gradual growth is attributed to the need for authorized participants who can create and redeem ETF shares.
According to ETF analyst Eric Balchunas, many firms will only list authorized entities closer to the ARK Invest deadline. This strategy ensures that the ETF’s creation and redemption process are controlled and regulated.
In conclusion, Goldman Sachs predicts that institutional adoption and regulation of blockchains will mature digital assets by 2024. The positive impacts of blockchain technology on businesses are expected to be fully realized at scale. Tokenization will benefit less common assets by improving liquidity, pricing visibility, and transparency. The approval of Bitcoin ETFs will have a slow start but is expected to gain traction as the year progresses.
Analyst comment
Positive news: Goldman Sachs predicts the future of digital assets and expects institutional adoption and regulation of blockchains to mature digital assets by 2024. This will lead to improved liquidity and more opportunities for businesses to leverage blockchain technology.
Neutral news: Goldman Sachs highlights that blockchain’s impact on businesses is only fully realized at scale and as more businesses adopt the technology, they will discover its immediate benefits and unlock commercial propositions.
Positive news: Goldman Sachs executive predicts that tokenization will benefit less common assets the most, improving liquidity, pricing visibility, and transparency. This will open up new opportunities for investors and businesses.
Neutral news: Goldman Sachs suggests that the approval of Bitcoin ETFs will have a slow start but eventually gain traction, attracting investments from pension funds and insurers and improving Bitcoin’s overall liquidity.
Positive news: Goldman Sachs expects Bitcoin ETFs to gain traction in 2024, although their growth may not be immediate. This is attributed to the need for authorized participants and a controlled creation and redemption process.
Analyst perspective: Institutional adoption and regulation of blockchains will drive the maturity of digital assets by 2024. Tokenization will revolutionize various industries, and Bitcoin ETFs will gradually gain traction, attracting more investments. Overall, the market for digital assets is expected to grow and present opportunities for businesses and investors.
