Goldman Sachs piled back into the emerging cryptocurrency market earlier this year, when it relaunched its bitcoin trading desk after a short hiatus. Earlier this month, the Wall Street bank began offering an investment service that allows its high-net-worth clients to profit from a rise in bitcoin prices without having to own the digital currency.
“It’s a great time to be in the space,” John Chow, an executive at cryptocurrency trading firm Cumberland DRW, which is working with Goldman on its new bitcoin investment effort, told Bloomberg.
Goldman is hardly alone. Fidelity recently filed for regulatory approval to launch a bitcoin fund that the mutual fund and 401(k) giant says is aimed at wealthier individual and institutional clients.
Crypto for the people
Other major financial players catering to less moneyed customers have also hopped on the bandwagon as cryptocurrency prices soared. A recent PayPal promotion offered $25 to the first 48,000 customers who bought at least $25 worth of bitcoin using the payment company’s app. And PayPal-owned Venmo last month began allowing users to buy and sell bitcoin and other cryptocurrencies in increments of as low as $1.
Robinhood, the popular trading app geared to younger investors, said that its digital currency offering had 9.5 million users in the first quarter of 2021, up from 1.5 million at the end of last year. As with stocks, Robinhood allows users to buy bitcoin and other cryptocurrencies commission-free, including dogecoin, the digital currency originally launched as a joke, which is among the riskiest digital currencies. Robinhood’s website says, “Crypto trading involves significant risk.”
The timing couldn’t have been worse. In the past month, bitcoin and other cryptocurrencies have plunged. This week, the price of bitcoin fell to as low as $30,000. Although it rebounded to $40,000, bitcoin’s value remains more than a third lower than its all-time high of $63,000 notched in April.
The downdraft has reduced bitcoin’s total value by roughly $450 billion, according to Coinmarketcap.com, while ethereum and other cryptocurrencies have also slumped. The sudden decline is undermining the case bitcoin bulls make for why even average investors should take a chance on cryptocurrencies.
Crypto doesn’t replace the dollar
One of the main arguments bitcoin proponents make is that digital currencies represent a cheaper, more efficient way of doing business. The problem: Only a very small number of people are using bitcoin to buy goods and services.
In 2016, the average number of purchases made with bitcoin cracked 200,000 a day for the first time. Five years later, that figure is only modestly higher. There have been an average of…
Read more:Wall Street and Main Street financial firms embraced bitcoin. Now it’s crashing.
