The cryptocurrency markets experienced a turbulent week in early September 2018, largely driven by what Goldman Sachs Chief Financial Officer Martin Chavez called “fake news” regarding the bank’s alleged decision to scrap its planned Bitcoin trading desk. The fallout from the misleading reports sent shockwaves through an already fragile market, with Bitcoin shedding 5% of its value in a single day on Wednesday, September 5, before recovering only marginally by the end of the week.
TL;DR
- Goldman Sachs CFO Martin Chavez publicly denied reports that the bank had abandoned its crypto trading desk plans
- Bitcoin dropped 5% on the fake news but only recovered 1% after the denial
- Ethereum hit one-year lows around $217, down over 23% for the week
- The incident highlighted the crypto market’s ongoing sensitivity to institutional news
- Chavez clarified Goldman is exploring “over the counter derivatives” for crypto
The Goldman Sachs Saga Unfolds
On Wednesday, September 5, 2018, reports surfaced claiming that Goldman Sachs had decided to abandon its highly anticipated Bitcoin trading desk, sending immediate tremors through the cryptocurrency market. Bitcoin, which had been trading near the $7,400 mark earlier in the week, plunged sharply as the news spread across social media and financial news outlets. By the time the dust settled, BTC had fallen approximately 12% from its weekly high, settling around the $6,500 level.
However, the narrative took a dramatic turn the following day when CFO Martin Chavez appeared at a conference and publicly dismissed the reports as “fake news.” Chavez clarified that such a trading desk had never been formally announced in the first place, and that Goldman Sachs was in fact continuing to explore cryptocurrency-related initiatives, specifically mentioning interest in “over the counter derivatives” for digital assets. The revelation exposed how quickly unverified information could move markets in the still-maturing crypto space.
Market Reaction Exposes Deeper Vulnerabilities
The asymmetric nature of the market’s response was particularly telling. While the negative fake news triggered a 5% sell-off on Wednesday, the positive correction on Thursday yielded only a 1% recovery. Bitcoin stabilized around $6,467 by Friday, September 7, but the damage to sentiment was already done. Ethereum fared even worse, with ETH hitting $217.20 — its lowest level since October 2017 — representing a staggering 23.6% decline over the seven-day period. Cardano also touched one-year lows near $0.084, nearly 85% below its yearly peak of $0.50.
The muted recovery despite the denial from one of Wall Street’s most powerful institutions underscored a broader issue: the cryptocurrency market in late 2018 was still heavily driven by sentiment and speculation rather than fundamentals. Traders and analysts noted that positive news barely moved the needle while negative rumors could trigger cascading liquidations.
Institutional Interest Persists Despite Setbacks
Beyond the Goldman Sachs episode, the week also brought signs that institutional interest in crypto was far from dead. Reports emerged that BlackRock, the $6 trillion asset management giant, was working with cryptocurrency exchange Coinbase in an advisory capacity on a potential exchange-traded fund. While BlackRock CEO Larry Fink had previously described cryptocurrency as an “index of money laundering,” the mere involvement of such a significant institutional player kept hope alive among bulls that Wall Street would eventually embrace digital assets.
These institutional developments, however tentative, were occurring against a backdrop of continued innovation in the blockchain technology space. The week’s events served as a stark reminder that the gap between Wall Street’s cautious exploration and the crypto market’s volatility-driven expectations remained as wide as ever in September 2018.
Why This Matters
The Goldman Sachs fake news incident of September 2018 was a watershed moment that exposed the cryptocurrency market’s fundamental vulnerability to misinformation. It demonstrated that even in a market worth over $200 billion at the time, a single unverified report could trigger billions in sell-offs within hours. The event also highlighted the critical importance of institutional players in crypto — not just for capital inflows, but as sentiment anchors. As the industry matured in the years that followed, this episode would be remembered as one of the clearest examples of why verified information and institutional transparency are essential for healthy market development.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Past market events do not guarantee future results. Always conduct your own research before making investment decisions.