Goldman Sachs' head of digital assets revealed that institutions are increasingly entering the crypto market, with the recent surge in bitcoin prices driven by institutional investors and the launch of bitcoin ETFs driving a "psychological shift."

Goldman Sachs is seeing more institutions jumping into crypto, the global investment bank's head of digital assets said, noting that to date bitcoin price movements have been primarily driven by retail investors.

Bitcoin ETF Triggers 'Psychological Shift'

Goldman Sachs' head of digital assets, Mathew McDermott, spoke about crypto at the Digital Asset Summit (DAS) conference in London on Tuesday. The investment bank launched its crypto trading desk in 2021 and continues to expand it.

Bitcoin surged to a record high last week but has since experienced a correction, dropping below $63,000 on Tuesday. Commenting on the recent surge in bitcoin prices, McDermott stressed:

Price movements... are still driven by retail primarily. However, the institutions that are starting to come in... You can see that market tastes have changed.

"However, the institutions we are starting to see are starting to come in," he stressed, adding that their tastes have "changed."

"Last year was tough, but just coming into this year we've seen a big shift not only in terms of client types but also in terms of volume," said the Goldman analyst, adding that the bitcoin exchange-traded funds (ETFs) that launched early January has prompted a “psychological shift.” Major banks, including Goldman Sachs, are eyeing blockchain technology's potential beyond cryptocurrencies, believing it could revolutionize asset trading, enabling the issuance of digital versions of traditional assets such as bonds.

McDermott opined:

I think as time goes on, we'll start to see more asset classes being tokenized and really gaining some scale - but maybe that's in the next year or two.

Recently, Goldman Sachs, CBOE, Standard Chartered, and a number of other financial institutions participated in trials of the Canton Network, a protocol that aims to achieve interoperability in applications that use resources from different blockchains.

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