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Goldman Sachs Expects Crypto Market to Explode in 2024 as Traditional Institutions Enter

2 mins
Updated by Ryan James
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In Brief

  • According to Matthew McDermott of Goldman Sachs, institutions will mature digital assets by scaling proprietary blockchains in 2024.
  • McDermott thinks that traditional assets will be tokenized before more exotic ones, both of which will have settlements streamlined.
  • He added that Bitcoin exchange-traded funds will grow gradually and add to Bitcoin's overall liquidity if they are approved in 2024.
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Goldman Sachs predicts that institutional adoption and regulation of blockchains will mature digital assets in 2024. The bank’s head of digital assets, Matthew McDermott, said businesses that have experienced blockchain’s efficiency are now scaling to maximize commercial opportunities as the markets await a Bitcoin exchange-traded fund (ETF).

McDermott suggested that blockchains’ positive impacts on businesses are only realized at scale. He expects the renewed uptake from banks to enhance liquidity in the markets for tokenized assets.

Goldman Sachs Predicts Future of Digital Assets

“When you look at collateral mobility, there’s still a lot of inefficiencies that are a function of systems that are many decades old- when you actually start to see people adopt the adopt the technology, they’ll recognize that not only can you see a commercial proposition on the forward, you can actually see it today,” According to McDermott.

McDermott predicts that traditional assets will be tokenized ahead of their more exotic counterparts. Less common assets will benefit the most in the areas of liquidity, pricing visibility pricing, and transparency. 

Read more: What is Tokenization on Blockchain?

His sentiments echo those of William Quigley, the co-founder of the collectibles-focused blockchain WAX. Quigley told BeInCrypto he expects the tokenization industry to build a niche in 2024 before maturing in 2030.

Bitcoin ETFs Will Grow Slowly

In the meantime, McDermott argues that the approval of Bitcoin exchange-traded funds (ETFs) will invite investments by pension funds and insurers who will improve Bitcoin’s overall liquidity. The US Securities and Exchange Commission (SEC) has until Jan. 10, 2024, to rule on an ETF application by ARK Invest. Analysts expect the SEC to approve all thirteen applications and ARK’s to ensure fair competition.

McDermott predicts Bitcoin ETFs may not grow immediately upon approval. Rather, they will gain traction as the year progresses. 

Bitcoin ETFs Need Authorized Participants
Bitcoin ETFs Need Authorized Participants | Source: Eric Balchunas

Read more: What is The Impact of Real World Asset (RWA) Tokenization?

Applicants had until Dec. 29, 2023, to amend their S-1 filings with the SEC. Bloomberg ETF analyst Eric Balchunas predicts that many firms will only list authorized entities that can create and redeem ETF shares closer to the ARK deadline.

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David Thomas
David Thomas graduated from the University of Kwa-Zulu Natal in Durban, South Africa, with an Honors degree in electronic engineering. He worked as an engineer for eight years, developing software for industrial processes at South African automation specialist Autotronix (Pty) Ltd., mining control systems for AngloGold Ashanti, and consumer products at Inhep Digital Security, a domestic security company wholly owned by Swedish conglomerate Assa Abloy. He has experience writing software in C,...