Goldman Sachs wants to invest in Bitcoin and Ethereum

Goldman Sachs is eyeing the Bitcoin and Ethereum markets. CEO David Solomon said the Wall Street firm is ready to “evaluate” its entry, but only if regulators clear the path. Solomon made the statement during a Reuters event on Tuesday.

His comments come as Bitcoin hit over $100,000 last week, driven by optimism about crypto’s future under President-elect Donald Trump.

Solomon noted that regulatory changes are expected but remain uncertain. “There’s a view that the regulatory framework is going to evolve differently than it seemed under the last administration,” he said.

Goldman Sachs has been exploring blockchain technology for years, launching its GS DAP tokenization platform in 2022 and testing the Canton Network, which focuses on institutional asset interoperability.

Goldman expects growth in M&A and private equity

Solomon also discussed expectations for a rebound in mergers and acquisitions (M&A). He said dealmaking in M&A and equity markets might exceed the 10-year average by 2025. Private equity buyouts have lagged recently, but he expects activity to pick up next year.

The firm has seen its investment banking division recover over the past year, although private equity deals have been slow. Hedge funds, on the other hand, are showing growing interest in crypto products. Goldman has noted increasing demand from these clients, reflecting a shift in traditional finance toward blockchain-based assets.

Goldman Sachs stock (NYSE:GS) slipped 0.4% on Tuesday, while Bitcoin dropped 3.3% to $94.6K. Ethereum prices also saw slight declines, but the broader market remains optimistic. Institutional players are closely watching developments as firms ramp up applications for crypto exchange-traded funds (ETFs). Many believe the SEC could approve these ETFs under the new administration.

Trump’s tariffs could reshape inflation and rates

Trump’s plans for new tariffs are another factor affecting markets. On Monday, he proposed a 10% tariff on goods from China and a 25% tariff on imports from Canada and Mexico. According to Goldman’s chief economist Jan Hatzius, these moves could push inflation higher.

“Using our rule of thumb, every 1% increase in tariff rates raises core PCE by 0.1%. If implemented, the proposed tariffs could boost core PCE by 0.9%,” Hatzius explained. Core PCE, the Federal Reserve’s preferred inflation measure, was already at 2.8% in October, above the Fed’s 2% target. The new tariffs could make it harder for the Fed to consider rate cuts in 2025.

Hatzius added that the tariffs could generate nearly $300 billion in revenue annually, with China bearing the brunt. Canada and Mexico may avoid blanket tariffs, depending on Trump’s conditions regarding immigration and drug enforcement. However, these tariffs remain proposals, with exceptions and negotiations likely.

Market expectations for Fed rate cuts in 2025 have cooled, partly due to a stronger U.S. economy and the uncertainty surrounding new fiscal policies. Fed Chair Jerome Powell said the central bank would consider the impact of these policies on inflation before making decisions.

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