Goldman Sachs’ major investors are reportedly showing renewed interest in cryptocurrency following the approval of the spot Bitcoin Exchange-Traded Fund (ETF). Last year, these clients were inactive due to the failure of the 2022 FTX exchange. However, with the recent ETF approval, many large clients are now becoming active again, while others are exploring the possibility of getting involved in the crypto market.
According to Max Minton, the head of digital assets for Goldman Asia Pacific, the resurgence of interest was triggered by the approval of the ten-spot Bitcoin ETFs. This impact was previously mentioned by Goldman Sachs in a post published by Crypto News Flash.
Earlier in February 2023, Mathew McDermott, the global head of digital assets at Goldman Sachs, discussed the hesitation of large investors to reenter the market. McDermott stated that the lack of well-regulated and well-capitalized entities posed significant challenges to crypto adoption. The market pullbacks experienced in 2022 after the collapse of the FTX exchange also discouraged large investors from participating in the crypto market. However, Goldman Sachs has consistently defended the industry, stating in one of its reports that crypto does not pose a major risk to the global economy.
Currently, the market is performing well, with Bitcoin trading at $67,018 following a 4% surge in the last 24 hours. Bitcoin has appreciated by 51.77% year-to-date.
Goldman Sachs’ crypto trading desk, which was launched in 2021, has experienced significant growth, offering cash-settled Bitcoin and Ether option trading, as well as CME-listed Bitcoin and Ether futures. Although last year was relatively quiet for the desk, this year has seen impressive market runs, with Bitcoin reaching new all-time-high prices ahead of the anticipated halving event.
Most of the renewed interest in crypto comes from existing clients, particularly traditional hedge funds. Goldman Sachs is actively working to expand its client base to include asset managers, bank clients, and selected digital asset firms.
Over the years, clients have utilized crypto derivatives for directional bets, yield enhancement, and hedging purposes.
In 2023, Goldman Sachs reported having $2.8 trillion in assets under management, and this figure is expected to grow significantly this year due to increasing demand. While some clients are shifting their focus to altcoins, Bitcoin remains the primary target. The focus on Ethereum may change depending on the decision of the US Securities and Exchange Commission (SEC) regarding the Ether ETF.
Goldman Sachs’ involvement in the crypto industry goes beyond trading, as the bank also explores traditional asset tokenization using blockchain technology. McDermott emphasizes the bank’s focus on “tokenization, remaking the plumbing of the financial market, and the impact of digital money on markets.”
Overall, Goldman Sachs is excited about the potential impact of crypto technology on various parts of the financial system and recognizes the growing adoption of digital assets by financial institutions.