Digital asset market expected to grow in 2024

Goldman Sachs executives believe that as more blockchain commercial applications enter the market, the strengthening of supervision will help promote the development and maturity of the digital asset market in new investment applications, and expect the market to further develop next year.

Mathew McDermott, head of digital assets at Goldman Sachs, said in an interview with Fox Business Channel that One of the biggest developments in the digital assets space last year was the increasing participation of traditional financial institutions in the space in the past 12 to 18 months. .

He explained that this is happening against the backdrop of people gradually realizing the potential of digital assets, which can improve efficiency, reduce risks, and have a positive impact on business models and the way enterprises operate. This has been helped by increased regulatory transparency around the world.

McDermott pointed out that digital assets are gradually being accepted by more people, which creates opportunities for the market to focus on building and scaling. This is also the stage where the business value proposition begins to emerge.

Tokenization is a widely discussed topic and I think the market will start to develop next year. Across various sectors in particular, we will see increased adoption at scale. The buy-side in an investor context will be a big driver as we will start to see the emergence of on-chain secondary liquidity. For me, this will be one of the most critical developments next year.

McDermott also said that greater adoption of the technology will enhance "collateral liquidity" next year by solving problems in the "market financial pipeline".

“When looking at the liquidity of collateral, we can see that there are still some inefficiencies in the system from decades ago. These issues may involve fragmented custody, unsynchronized settlements, and inefficient use of capital and liquidity. aspect," McDermott explained. "So what I fully expect for next year when it works this way is that as people start to adopt this technology, they realize that not only are the business propositions foreseeable in the future, but they are already achievable today."

"At a very micro level, we are already doing this, we are active in this area and we are starting to see the commercial value of it. Now the market is really paying attention to this area and they have realized that you can reduce risk, Operational settlement, and jump risk in terms of collateral allocation," McDermott said.

He went on to say that through 2024, he believes growth will be concentrated in more general asset classes, before gradually starting to expand into more opaque asset classes at the end of the year and beyond.

“I fully expect buy-side adoption to grow significantly over the next year,” McDermott said.

“And then I think probably by the end of this year, probably next and beyond, you’re going to start to see some traction in some of the more opaque asset classes where the value proposition may be greater purely because of the opaque pricing , liquidity may be lower, but transparency is higher,” he added.

The U.S. Securities and Exchange Commission is considering an application to approve a Bitcoin and Ethereum spot exchange-traded fund (ETF), possibly in early 2024, making the securities available to traders. McDermott said the approval will allow more institutional investors to enter the digital asset market, even if they don’t necessarily invest directly in the underlying assets.

"First, it broadens and deepens the liquidity of the market. Why do you do this? Do it this way because you are actually creating institutional products that can be funded by Institutions trade," McDermott said. "I think, for me, it opens the door to pensions, insurance companies and so on."

He added that while he does not expect the approval of a spot cryptocurrency ETF to immediately lead to significant changes in the market, the market will grow within a year.

“I think even with the approval in the first quarter, you will gradually see throughout the year a broadening and deepening of liquidity and those who want to trade this product. As we all know, this is the best performing asset this year Category."

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