Goldman and Barclays' investment in Elwood is a success for cryptocurrency adoption

Two of the world's leading investment banks have just made a large investment in the cryptocurrency trading platform Elwood Technologies, the Financial Times reported on Sunday.

US banking giant Goldman Sachs and powerful British bank Barclays participated in a $ 70 million funding round, along with venture capitalist (VC) Dawn Capital and the VC divisions of Germany's Commerzbank and the US cryptocurrency billionaire's Galaxy Digital. Mike Novogratz.

The funding round valued Elwood at approximately $ 500 million and marked the first time that Elwood Technologies has obtained outside funding.

Similar to the Bloomberg terminal

Elwood Technologies was founded by British hedge fund billionaire Alan Howard with the initial goal of managing his personal digital asset fortune.

Since 2020, Elwood has shifted from wealth management to selling market data, trading infrastructure and wealth management software for clients looking to invest in digital assets.

According to the Financial Times, the company's chief executive, Strickland, said it provides a technology platform similar to Bloomberg's hugely popular terminal and BlackRock's “Aladdin” portfolio management system.

A positive sign for cryptocurrencies

Elwood Technologies CEO James Strickland told the Financial Times that the success of the latest funding round, which comes despite the recent turmoil in cryptocurrency markets, is "another validation of cryptocurrency longevity."

"We are receiving investments from financial institutions that don't expect to see massive returns in 15 minutes," he continued, adding that "I think it's a reassurance message."

In the meantime, “with the increase in institutional demand for cryptocurrencies, we have actively expanded our market presence and capabilities to meet customer demand,” noted Mathew McDermott, global head of digital assets at Goldman Sachs. He said the latest investment in Elwood demonstrates the bank's "continued commitment" to the digital assets space.

Cryptocurrency analysts framed the latest news as another positive sign for long-term mainstream adoption of cryptocurrencies and digital assets.

The cryptocurrency markets have been volatile in the past few weeks

Total cryptocurrency market capitalization has dropped from over $ 2,1 trillion to less than $ 1,3 trillion since early April, a drop of nearly 40%, of which nearly 20% this week alone. at the time of writing.

Earlier in the week, global cryptocurrency market capitalization even dropped below $ 1.100 trillion at one point for the first time since early February 2021.

Fears over slowing global growth at a time when major global central banks are intent on aggressively raising interest rates to tame rampant inflation have been cited as the root cause of the recent slump.

Cryptocurrencies are still seen primarily as risk-sensitive and speculative assets, hence their susceptibility to risk-off flows, and are also (like precious metals) allergic to rising interest rates, as this marks a rise. of the opportunity cost of holding unprofitable assets such as cryptocurrencies or gold.

While it may be too early to define the bottom of the recent slump given the risk of the Fed becoming even more hawkish, analysts say long-term institutional investors are drawn to this sector now as cryptocurrency valuations are more favorable.

Goldman and Barclays' move to invest in Elwood fits into a broad trend by major financial institutions to meet the growing demand for cryptocurrency trading and investment services from their clients.

US wealth management giant Fidelity has announced plans to allow savers of 401 (k) retirement accounts to allocate up to 20% of their bitcoin portfolio (quotation BTC) and to expand to other digital assets soon.