Bitcoin has so far attracted the ire and suspicion of Wall Street, most notably with the comments of JP Morgan chief executive Jamie Dimon over the last few weeks, where he described bitcoin as a ‘fraud’ that would ‘blow up’.
But if rumours swirling around banking giant Goldman Sachs are to be believed, it’s not necessarily a view shared by everyone across the sector. In fact, according to reports in the Wall Street Journal, Goldman are now seriously looking at establishing their own bitcoin and cryptocurrency trading arm, in a bid to capitalise on these emerging markets.
Their CEO Lloyd Blankfein added fuel to the fire on Twitter, when he refused to declare a position on his view of the merits of bitcoin.
On top of that, Goldman Sachs already recognises cryptocurrencies as an asset class in its analysis and reporting, and would be the biggest, if not the first, name from Wall Street to take bitcoin more seriously.
Rival investment firm Fidelity Investments has already been engaged in a number of bitcoin projects through a dedicated R&D unit, including the recently announced partnership with leading wallet service Coinbase, to enable investors to better track the value of their holdings.
If Goldman Sachs were to take the plunge and establish a bitcoin trading desk, it would mark a landmark moment in the development of the currency, gaining mainstream financial acceptance for the first time.
At this stage, it is by no means certain that Goldman will proceed with their plans, and they have been keen to dampen rumours at this stage. However, having historically favoured high risk/high reward investments, and at a time of low market volatility elsewhere, the omens are bright for Goldman backing a more aggressive approach in the bitcoin and cryptocurrency space.
So what would this mean for investors, and for the wider bitcoin markets? Institutional trading could be the rocket fuel needed to boost bitcoin prices still higher, and the increased flow of liquidity into the market would help make for more transparent trading conditions.
At the same time, the move would be perceived as an endorsement of bitcoin as an asset, and introduce a level of stability to the currency it has so far flourished without.