On Early First week of September, Business Insider dropped a bombshell report: Wall Street investment bank Goldman Sachs was abandoning its plans to launch a cryptocurrency trading desk.
The bank is ditching plans to open a desk for trading cryptocurrencies in the foreseeable future, according to people familiar with the matter, as the regulatory framework for crypto remains unclear.As part of that decision, Goldman has moved plans to open a desk for trading cryptocurrencies further down a list of priorities for how it can participate in cryptocurrency markets, the people said. It may revive these plans later, they added.
The world's largest digital currency plunged about 20% in two days on the news, to a low of $6,866. As of this writing, it's trading above $6,400.
But the Business Insider report freaked out the market.People were thinking, "Oh my goodness, if Goldman Sachs doesn't like crypto, then how much value can crypto have?"
Here's the thing... It was all fake news.
There's one reason which everybody thinks is the main reason [for the drop in Bitcoin's price]... and then there's the real reason why we're down. So what I'm going to do here is just walk you through a couple of different news stories. and let you know what the "fake" reason is...
But you don't have to take my word for it...
A day later, Marty Chavez, who heads Goldman's securities division, said the same thing. Here's what he told the online publication TechCrunch:
In today's essay, I'll explain why you should be wary of anything you hear about cryptocurrencies from the mainstream media...
The Fake News
Before I show you why the report was fake news, I want to make something clear: Cryptocurrencies don't need Goldman Sachs to be wildly successful. Let's just get that established right off the bat.
Let me explain...
Political and economic crises in Venezuela, Argentina, Turkey, and Iran have caused the value of their currencies to drop by as much as 99%. Further, much of the world lives under regimes that regularly destroy the value of their paper money. As cryptocurrencies like Bitcoin become easier and cheaper to use, it's our belief the citizens of those countries will use Bitcoin as a long-term store of value.
So with or without Wall Street, crypto assets are destined for widespread adoption.The more important takeaway though, is that you need to dig deeper when you see fear-mongering headlines about cryptocurrencies.
Even though Business Insider reported that Goldman Sachs was dropping its plans for a trading desk (which Chavez said is "fake news")... the same article went on to say that Goldman Sachs was still planning to offer cryptocurrency custody:
But for now, Goldman is focusing on other projects such as a custody product for crypto, which would mean that the bank holds cryptocurrency and, potentially, keeps track of price changes on behalf of large fund clients.
This is hugely bullish for cryptocurrencies because the lack of credible custodians has kept institutional money from making crypto investments.
This should come as no surprise to regular readers of the Daily. Just last month, I told Nick that I've talked to people behind the scenes who are working on custody solutions.
But most reports ignored that part of the Business Insider story...
Instead, they focused on the fake news headlines about Goldman ditching its crypto trading desk. As I explained to my subscribers... if you're offering custody, you'll more than likely offer trading as well.
That's why I dismissed the news as unimportant and "fake."
Ignore the Noise and Look at the Bigger Picture
When it comes to new technology like cryptocurrencies (and their underlying blockchain technology), you have to look at the bigger picture.
And what's the bigger picture?
Cryptocurrencies like Bitcoin solve real problems for billions of people trapped in financially repressive regimes.
While the media fret over "trading desks," Wall Street firms are quietly prepping crypto services for their clients. Fidelity, Nomura, JPMorgan Chase, and Northern Trust are all getting into the crypto custody business.
And this trend is just beginning.
Events are unfolding that will force even more traditional financial firms into cryptos.
Thank You,
Regards,
