Goldman Sachs Reopens Crypto/Bitcoin Trading Desk

Investment bank Goldman Sachs will reopen its cryptocurrency/bitcoin trading desk from next week. The trading desk will be within Goldman’s digital assets sector, which includes other projects related to blockchain and digital currencies.

Initially, Goldman will offer its clients Bitcoin (BTC) futures and non-deliverable forwards (NDFs), according to Reuters. The bank is also looking into offering bitcoin exchange traded funds (ETF), as well as investigating digital asset custody. Overall, the digital assets sector is a part of the US bank’s Global Markets division.

Growing Institutional Interest

The reopening comes amidst growing institutional interest in Bitcoin, as the price of the cryptocurrency has skyrocketed 470%, over the past year. One reason that investors and some companies have taken a shine to Bitcoin is the growing idea that it can hedge against rising inflation. This has especially come to the fore as governments around the world have spent billions on stimulus in the face of economic restrictions from the coronavirus pandemic.

Despite this growing consensus, Bitcoin remains volatile, which is the major reason institutional investors have been so hesitant thus far. Goldman hopes to mitigate its clients’ risk by offering NDFs, which is a type of derivative that allows investors to take a view on an asset’s future price. Goldman first opened a cryptocurrency trading desk in 2018. However, at the time, Bitcoin’s price was falling from record highs, which largely curtailed any further mainstream interest. Last year, the investment bank reportedly said that Bitcoin was “not an asset class” and “not a suitable investment.”

Since then, several established financial institutions, such as CME Group, Intercontinental Exchange, and Fidelity Investments have adopted cryptocurrencies as the market infrastructure for them had legitimately developed.

Bitcoin at a “Tipping Point”

Earlier today, a report from Citi declared that Bitcoin was at a “tipping point.” As Bitcoin has been increasingly embraced by firms such as Tesla, Bitcoin could be approaching a “massive transformation” into the mainstream. On the other hand, the report warned of potential “speculative implosion.”

According to the Citi report, wide scale adoption of Bitcoin would depend on mainstream finance’s acceptance of digital currencies and wallets. Goldman’s reestablishment of its cryptocurrency trading desk portends well for this outcome.


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