Cryptocurrencies plummet as Goldman Sachs drops trading plans

The market’s biggest digital coins dropped sharply on Wednesday amid a report that Goldman Sachs Group Inc. is pulling back on near-term plans to set up a cryptocurrency trading desk.

Bitcoin, the largest virtual asset, fell as much as 6 percent to $6,917.47 in early trading, while Ether skidded as much as 12 percent. Litecoin and Ripple followed suit. Bitcoin hovered near $7,000 as of 9:43 a.m. in New York. U.S. stocks with exposure to the digital-coin market also slumped

Goldman Sachs has moved its plan for a crypto trading desk lower down on its priority list, Business Insider reported, citing people familiar with the matter. The Wall Street banking giant is focused on other digital-coin services, such as a custody product, the report said.

The hit to coin prices Wednesday comes as Goldman joins a growing list of traditional financial players that have abandoned or delayed crypto projects after a rout this year. Bitcoin has lost half of its value in 2018, while trading on crypto exchanges has fallen by 80 percent. The overall market for the tokens is currently worth about $223 billion, down from more than $800 billion in early January, according to Coinmarketcap.com.

“The expectation of adoption by Wall Street has been a major theme for the cryptocurrency market for the last year, so any kind of updates on that can certainly move the prices,” said Mati Greenspan, senior market analyst at currency trader eToro, by phone from Russia. “Even if it’s not true, it should be enough to cause a minor selloff like this in cryptocurrencies.”

Goldman Sachs had been taking baby steps around cryptocurrencies since hiring Justin Schmidt earlier this year as head of its digital-asset markets. It was among the first Wall Street firms to clear Bitcoin futures offered by Cboe and CME Group Inc.

“In response to client interest in various digital products we are exploring how best to serve them in this space,” a spokesman for Goldman Sachs said. “At this point we have not reached a conclusion on the scope of our digital asset offering.”

Riot Blockchain Inc. slid 6.3 percent, while Marathon Patent Group Inc. lost 7.7 percent. Overstock.com Inc. dropped 2.8 percent.

“It’s a little bit shocking to me the attention this market gets versus its size,” Chris Concannon, chief operating officer of Cboe Global Markets Inc., said last month. “It’s a fifth of Apple. The entire crypto market is a fifth of Apple.”

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Cryptocurrencies plummet as Goldman Sachs drops trading plans