Goldman Sachs has predicted that the institutional adoption and regulation of blockchains will mature digital assets by 2024. According to Matthew McDermott, the bank’s head of digital assets, businesses that have experienced blockchain’s efficiency are now scaling up to maximize commercial opportunities while waiting for a Bitcoin exchange-traded fund (ETF). McDermott believes that the positive impacts of blockchains on businesses are only fully realized at scale, and he expects the renewed interest from banks to enhance liquidity in tokenized asset markets.
McDermott also predicts that traditional assets will be tokenized before more exotic assets, with less common assets benefiting the most in terms of liquidity, pricing visibility, and transparency. His views align with those of William Quigley, co-founder of blockchain WAX, who expects the tokenization industry to build a niche by 2024 and mature by 2030.
In the meantime, McDermott argues that the approval of Bitcoin ETFs will attract investments from pension funds and insurers, thereby improving Bitcoin’s overall liquidity. The US Securities and Exchange Commission (SEC) has until January 10, 2024, to rule on an ETF application by ARK Invest. McDermott predicts that Bitcoin ETFs may not immediately grow upon approval but will gain traction as the year progresses.
Applicants for ETF listings had until December 29, 2023, to amend their filings with the SEC. Bloomberg ETF analyst Eric Balchunas expects many firms to only list authorized entities capable of creating and redeeming ETF shares closer to the ARK deadline.
Hot Take: Goldman Sachs Foresees Maturation of Digital Assets by 2024
Goldman Sachs predicts that institutional adoption and regulation of blockchains will lead to the maturation of digital assets by 2024. Businesses scaling up their use of blockchain technology are expected to enhance liquidity in tokenized asset markets. Traditional assets are likely to be tokenized before exotic assets, with less common assets benefiting the most in terms of liquidity, pricing visibility, and transparency. While waiting for the approval of Bitcoin ETFs, investments by pension funds and insurers are expected to improve Bitcoin’s overall liquidity. Although the immediate growth of Bitcoin ETFs may be slow, they are anticipated to gain traction throughout the year.
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