Major cryptocurrencies took a nosedive this week, with ether () logging a double-digit percentage loss on the week after a report Goldman Sachs is putting the brakes on opening a cryptocurrency trading desk.
Prices tumbled Wednesday after the Business Insider report disappointed investors who thought the Wall Street banking giant would start trading digital currencies as early as this summer. In , Goldman had said it was looking into possibly starting a new trading operation for bitcoin () and other cryptocurrencies. The Business Insider report, which cited people familiar with the matter, said Goldman still sees an uncertain regulatory landscape.
Goldman’s CFO refuted the report at a conference Thursday.
Jack Tatar, managing partner at Doyle Capital Management, tells ThirtyK he would not be surprised by Goldman hitting the pause button on the crypto desk. “ still abound, and there’s, again, a need for clarity from regulators,” Tatar says.
The bank, however, reportedly wants to go ahead with rolling out its cryptocurrency custodial service. It’s a move that “would generate profits and new customers without the inherent risks associated with a crypto trading desk,” Bill Slaughter, president of Beneteau Capital Management in Miami, and a former Wall Street financial adviser, tells ThirtyK.
Despite Goldman Sachs CFO Martin Chavez saying the Business Insurance report is “fake news,” cryptocurrency prices remain lower.
Ether Dips to Fresh 2018 Low
Friday afternoon, bitcoin was trading at $6,501.48, according to ThirtyK data provided by , down 8.9 percent from the prior week. The cryptocurrency fell by nearly $1,000 in less than 24 hours after the Business Insider report, dipping close to $6,400 after having climbed to more than $7,300 last week. Bitcoin reached a high for the year of more than $17,000 in January and has been trending lower ever since.
Ether once again was hit the hardest, sliding to a new low for 2018. The cryptocurrency has been on a downward path attributed to continued selling by ICO founders. Friday afternoon it was down 25 percent for the week to $219.14. Litecoin (LTC) was up nearly 1 percent to $56.92.
Analysts also link the week’s downturn to a recent post on Reddit that said a bitcoin “whale,” or investor with an especially large position, was moving more than $100 million to crypto exchanges.
The Down Market Plods On
The week’s price dive comes after a small rally the prior week in most major cryptocurrencies as investors zeroed in on news pointing to growth in the digital currencies market, including a aimed at institutional investors looking to enter the digital currencies market. Cryptocurrencies continue to be marked by wide, daily and weekly price swings as the burgeoning market continues to find its footing.
Loukas adds that a couple of “excessive years” when bitcoin rallied some 2,000 percent are not likely to be resolved by a six- to nine-month bear market. “I suspect we still have some downside left before this market bottoms,” he says.
Cryptocurrency analyst tells ThirtyK it’s crucial bitcoin hold its yearly support at $5,800. Now that ether has made another year low, it could well fall below $200, he says, possibly to as low as $185. Dukas also believes “we are going to see more pain as this bear market enters its final stages.”
An Evolving Market
Longer term, many investors continue to mull over the implications and impact of a for the financial industry, if and when one is passed. Several bitcoin ETFs have already been shot down by the SEC this year, and more are still under consideration. The SEC has cited concerns about manipulation.
“The revenue opportunity exists,” says Tatar, “but the question for the financial industry will be, who will win, compliance or management?”
Tatar says what’s key is the current conversation is not if bitcoin and crypto assets are here to stay, but at what price. Digital currencies “are poised to continue to change our financial system,” he says.