Stock Analysis & Ideas

Goldman Sachs (NYSE:GS) Seeks Lucrative Crypto Deals After FTX Debacle

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Goldman Sachs is exploring investment opportunities in the crypto space given that several stocks are trading at steep discounts following the FTX fiasco. In contrast, rival banks continue to be skeptical about the highly risky crypto market.

The collapse of the cryptocurrency exchange FTX has rattled the digital assets market and made the crypto winter worse for the stocks in this space. Nonetheless, leading investment bank Goldman Sachs (NYSE:GS) sees this as an opportunity to spend “tens of millions of dollars” to buy or invest in crypto companies trading at low valuations, Reuters reported.

Goldman is Looking for Bargains in Crypto

Mathew McDermott, head of digital assets at Goldman, believes that the FTX fiasco has reinforced the need for regulated crypto players, providing big banks a chance to grab some business in this space. McDermott told Reuters that Goldman is conducting due diligence on several crypto firms.

The FTX debacle has significantly hit investors’ trust and has further pulled down cryptocurrencies. The world’s largest cryptocurrency Bitcoin (BTC-USD), which already lost significant value this year due to macro uncertainty, is hovering around $17,000 since the FTX saga. This level is much lower than the all-time high of over $68,000 seen in November 2021. While McDermott agrees that FTX’s bankruptcy has shaken investor confidence, he feels that the “underlying technology continues to perform.”

It’s worth noting that Goldman has invested in 11 digital asset companies (including CertiK, Coin Metrics, and TRM Labs) that provide services like cryptocurrency data and blockchain management.

Rival Banks’ Views on Crypto  

Interestingly, rival banks don’t echo Goldman’s sentiment. JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon has always been quite vocal about his dislike for crypto. In an interview with CNBC, Dimon called crypto “a complete sideshow” and compared crypto tokens to “pet rocks.”

Additionally, at the Reuters NEXT conference held on December 1, Morgan Stanley (NYSE:MS) CEO James Gorman stated, “I don’t think it’s a fad or going away, but I can’t put an intrinsic value on it.” Meanwhile, banking giant HSBC (NYSE:HSBC) has often stated that it has no interest in offering crypto services or launching a cryptocurrency trading desk.  

Amid the ongoing volatility in crypto market, let’s look at two crypto stocks that Wall Street is bullish about despite the high risk associated with this category.  

Riot Blockchain (RIOT)

Riot Blockchain (NASDAQ:RIOT) is one of the largest U.S.-based bitcoin miners. It produced 521 bitcoins in November, up about 12% year-over-year. However, the figure fell short of the company’s production target of about 660 BTC due to variance in the mining pool it participates in. Riot stated that it would be transitioning to another mining pool that offers a “more consistent reward mechanism.”

Is RIOT a Buy or Sell?

Riot Blockchain stock earns the Street’s Strong Buy consensus rating backed by eight Buys and one Hold. At $10.31, the average RIOT stock price prediction suggests 135.4% upside potential. Shares have plunged about 81% so far this year.

Hut 8 Mining (HUT)

Hut 8 (NASDAQ:HUT) is one of the leading bitcoin miners in North America. On Tuesday, the company disclosed that it produced 238 bitcoin in November, reflecting a 20.4% decline from October’s production. The decline resulted from the suspension of mining activities at the Ontario North Bay mining facility due to a dispute with the facility’s energy supplier.

Is Hut 8 a Good Stock a Buy?

Wall Street is cautiously optimistic about Hut 8 Mining stock, with a Moderate Buy consensus rating based on two Buys and one Hold. The average HUT stock price target of $3.50 implies over 215% upside potential. Shares have declined 86% year-to-date.

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