Goldman Sachs Research Report Analysis: Cryptocurrency Trading Declines for Ten Consecutive Months, Turning Point May Be Approaching
Gold Sachs Research Note: Crypto Trading Declines for Ten Months, Inflection Point May Be Near
Crypto trading volumes fell 30% in July and 21% in August, marking ten consecutive months of decline—a duration now exceeding the median of past five cycles. However, in a report dated August 24, Goldman Sachs expresses "cautious optimism" for the second half, suggesting a market recovery could provide significant upside potential.
The current crypto trading volume downturn has seen a 75% drop from its peak over ten months. While a brief rebound in April-May failed to sustain, a recent 21% market cap increase, if maintained, could signal a volume inflection point. Goldman notes sector valuations are near the 30th percentile of the past five years, presenting a favorable risk-reward profile.
Key catalysts include regulatory progress, such as the SEC's innovation exemption proposal and over 15 crypto firms receiving federal banking charters by 2026, which could bolster institutional adoption. Furthermore, crypto companies have cut costs by ~5% on average in 2026, improving operating margins and preserving cash flow.
The report highlights four Buy-rated stocks: HOOD ($124 target), IBKR ($114 target, on Conviction List), FIGR ($43 target), and COIN ($196 target), each benefiting from distinct growth drivers like structural account growth, international expansion, or regulatory tailwinds.
Overall, Goldman argues the sector has priced in significant pessimism, with a potential reversal supported by seasonal trends, election cycles, and a combination of market cap recovery, cost-cutting, and regulatory reforms.
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