The cryptocurrency market capitalization has plunged almost 70% from a record high of US$2.9 trillion in November, setting off a cascade of distress as well as speculation that several high-flying crypto operators are verging on insolvency.

For crypto critics it’s the “I told you so” moment, pointing to the unilateral freezing of customer accounts on wobbly trading platforms to support the argument the bubble has burst. Yet, most financial markets have had their bubble times, it’s the bargains left when it all goes pop that interests experienced investors. Cue Wall Street.  

Goldman Sachs Group, one of the world’s biggest investment banks, is said to be looking to raise US$2 billion to buy distressed assets from Celsius Network, one of the first crypto lenders to freeze withdrawals. Several others have followed in blocking client accounts, including crypto derivatives exchange CoinFLEX last week

Goldman, which had US$2.5 trillion in assets under management in 2021 according to its website, is reportedly gauging interest from Web3 crypto funds as partners for any bid for Celsius. If the reports of Goldman’s interest prove accurate — the bank declined to comment in the story first reported by Fortune —  it is seeking to buy Celsius for just 10% of the US$20 billion the company was previously valued at.

“People are starting to see opportunities there, distressed assets will attract buyers,” said Tony Sycamore, a financial markets analyst at City Index, a global forex trading platform. “Quite simply, there’s blood in the water and when you’ve got blood in the water, the sharks start to circle.”

Goldman isn’t the only one looking to make a deal.

Asset manager Morgan Creek Digital is attempting to raise US$250 million to counter an offer from crypto exchange FTX to bail out another crypto lender, BlockFi, which is among the firms caught in the fallout from the imploding crypto hedge fund Three Arrows Capital (3AC). 

Morgan Creek is reportedly concerned the financing deal with FTX, headed by billionaire Sam Bankman-Fried, will give FTX an inside track to buy BlockFi at a fire-sale price and wipe out current investors, which includes Morgan Creek. 

These companies looking at distressed assets “are taking a longer-term bullish view of the market,” Sycamore said. Any crypto price recovery is still some months away and will hinge on the U.S. Federal Reserve shifting away from raising interest rates, he said.

The Fed is raising rates to fight inflation in the U.S., which in May reached 8.6%, the highest in four decades. It has signaled it will continue with the policy and rates may reach 3% later in the year from the current benchmark federal-funds rate between 1.5% to 1.75%.

Fed policy, the Covid-19 pandemic, and the war in Ukraine are all factors that have combined to drag on economies and markets in 2022, including crypto. 

Bitcoin lost over 40% of its value in mid-June and fell below US$20,000 for the first time since December 2020, shortly after the Fed announced a rate increase of 75 basis points on June 15. 

Goldman’s interest in crypto shouldn’t be a surprise, Andrew Sullivan, a market analyst and former equities broker, told Forkast. Goldman is trying to stay ahead of competitors and they are already facilitating crypto transactions for institutional and private trader clients, he said.

“It certainly gives them an advantage over the other banks out there that are probably looking at the same thing, but far more cautiously,” Sullivan said.  

Sycamore at City Index said the crypto world is going through a series of macroeconomic events that are “big earthquakes” for the industry and it remains to be seen what banking giant Goldman will be able to retrieve from the rubble. 

 “They’ll probably find that US$2 billion without too much of a problem,” Sycamore said, referring to the reported bid for Celsius. “But on what terms? How long do they intend to hold it? We just don’t know.”