A ‘Significant Amount of Interest’ Pushes Goldman Sachs to Offer Ether Options & Futures Trading

A ‘Significant Amount of Interest’ Pushes Goldman Sachs to Offer Ether Options & Futures Trading

Mathew McDermott, head of digital assets at the bank, said clients are eager to trade crypto assets at current prices, which are currently at a “more palatable entry point” following the “cleansing exercise” in terms of leverage reduction.

Goldman Sachs Group is expanding into Ether.

The banking giant is now planning to offer futures and options trading in Ether, the second-largest cryptocurrency, in the coming months, according to Mathew McDermott, head of digital assets at Goldman.

Currently trading above $2,600, the $300 billion market cap cryptocurrency is still up 254% YTD after experiencing a drawdown of 60% from its all-time high of $4,380 last month.

The recent sell-off in the crypto market has resulted in the activity falling significantly, which has the average fees on the Ethereum Network at about $3 after going for $100 towards the end of May.

Since last month, the market has been in a deep rut; it makes sense that it will take time to attract interest again.

Meanwhile, it was only this year that the bank restarted its trading desk to help clients trade futures tied to Bitcoin. McDermott said Goldman also plans to facilitate trades via exchange-traded notes tracking Bitcoin. BTC -0.94% Bitcoin / USD BTCUSD $ 40,116.98
-$377.10-0.94%
Volume 40.11 b Change -$377.10 Open $40,116.98 Circulating 18.74 m Market Cap 751.63 b
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“We’ve actually seen a lot of interest from clients who are eager to trade as they find these levels as a slightly more palatable entry point,” McDermott told Bloomberg in an interview on Thursday.

“We see it as a cleansing exercise to reduce some of the leverage and the excess in the system, especially from a retail perspective.”

McDermott joined Goldman last year as the head of its digital currency efforts, and under him, the business has grown from four to 17 people. This year, the bank also invested in crypto start-ups. Last month, Goldman led the $15 million investment into Coin Metrics, and this month it put $5 million into Blockdaemon.

“We are looking at a number of different companies that fit into our strategic direction.”

In his interview, McDermott said his conversations with clients show that digital currencies aren’t just a fad. In a survey of 850 institutions last week, Goldman found that close to one in 10 are trading crypto, and 20% are interested in it. He said,

“Institutional adoption will continue. Despite the material price correction, we continue to see a significant amount of interest in this space.”

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Author: AnTy

Goldman Sachs Joins Blockchain Infrastructure Company’s $28 Million Funding Round

Goldman Sachs Joins Blockchain Infrastructure Company’s $28 Million Funding Round

Blockdaemon has been acquiring many institutional clients who are starting to allow their customers to buy Bitcoin and Ether before branching out to protocols that pay interest on tokens.

Blockdaemon has raised $28 million from lead investor Greenspring Associates along with Goldman Sachs Group Inc.

BlockFi, Warburg Serres, Uphold, and Voyager Digital Ltd., were other investors in the Series A fund-raising, as per the company statement.

The firm that creates and hosts the computer nodes for the blockchain network is planning to make acquisitions and double its headcount to 100. With the latest funding, the company aims to “help institutions quickly and securely scale blockchain infrastructure.”

Over the past year, the company has seen rapid growth and gained customers, including JPMorgan Chase, Citigroup, PayPal Holdings, Robinhood Markets, and E*Trade.

“We’re selling ten times what we did a year ago, mostly to new institutions coming into the space,” said Chief Executive Officer Konstantin Richter.

In the first quarter of 2021, Blockdaemon reported a net income of $18 million and revenue at about $24 million.

Goldman Sachs, which led the $15 million investment into data provider Coin Metrics, contributed $5 million to the Blockdaemon round. “It’s been a long dialogue with them,” Ritcher said.

The CEO further shared in an interview that he’s been seeing a progression among large financial firms that starts with them allowing their customers to buy Bitcoin and Ether before branching out to protocols that pay interest on tokens to secure the network.

“Large institutions are getting serious about paying yield on tokens out to their customers,” he said. “It shows that large financial institutions over time will want to rival Coinbase” by copying its model of easier ways to buy and earn interest on various digital coins.

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Author: AnTy

“Customer Demand” Pulling Them In; Goldman Sachs Joins Coin Metrics’ $15M Investment Round

“Customer Demand” Pulling Them In; Goldman Sachs Joins Coin Metrics’ $15M Investment Round

Money is pouring into the crypto market; as of April 27, 156 startups focused on digital technology had raised $3.1 billion, compared to just $2.3 billion raised in 341 deals in the entire 2020.

Coin Metrics has raised $15 million in a Series B investment round led by Goldman Sachs.

“We think this is a huge day for us,” Tim Rice, a co-founder and the firm’s chief executive officer said. “A huge credentialization.”

While Castle Island Ventures, Highland Capital Partners, Fidelity Investments, Avon Ventures, Communitas Capital, and Collab+Currency increased their investment in the company, new investors to join included Acrew Ventures, Morningside Group, BlockFi, and Warburg Serres Investments.

Founded in 2017, Coin Metrics is a cryptocurrency and blockchain data provider to institutional clients which plans to use the proceeds to grow in Europe and Asia, create new products and expand its current offerings.

Mathew McDermott, global head of digital assets for Goldman Sachs’s global markets division, will join Coin Metrics’ board of directors, Rice said in an interview.

According to Rice, the way large institutions such as asset managers and Wall Street banks are approaching crypto is different from the 2017 bull market as “This time around you have people looking for a holistic data solution,” he said. “They need to have solid data to get into the asset class.”

Fidelity Investments, one of Coin Metrics’ investors, is also its client. “We’ve definitely seen the institutions behave very seriously; they’re now signing contracts with us,” Rice said.

Banks that have been staying on the sidelines are also getting comfortable with the $2.47 trillion market.

“Customer demand is starting to pull them in,” Rice said.

Earlier this week, we reported that the largest cryptocurrency exchange in the US, Coinbase, also acquired data analytics platform Skew for an undisclosed amount to better serve its institutional and trading clients.

Money has been pouring into the crypto market amidst the ongoing bull run. Not just crypto assets but projects like Digital Asset Holdings LLC, Chainalysis Inc, Blockchain.com, Paxos Trust Co. are raising a lot of funds.

As of April 27, 156 startups focused on digital technology had raised $3.1 billion, compared to just $2.3 billion raised in 341 deals for all of 2020, according to CB Insights.

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Author: AnTy

Goldman Sachs to Start Offering its Wealthy Clients Access to Bitcoin Starting Next Quarter

Goldman Sachs to Start Offering its Wealthy Clients Access to Bitcoin Starting Next Quarter

The bank’s VP says there is “a large contingent of clients” looking for ways to participate in the crypto space and sees Bitcoin as a hedge against inflation.

Goldman Sachs plans to start offering its first investment vehicles for Bitcoin and other crypto-assets to its wealthy clients in the next quarter.

CNBC reported the news on Wednesday, citing an internal company memo seen by it.

In an interview this week, Mary Rich, the new global head of digital assets for Goldman’s private wealth management division, which targets individuals, families, and endowments with at least $25 million to invest, said,

″We are working closely with teams across the firm to explore ways to offer thoughtful and appropriate access to the ecosystem for private wealth clients, and that is something we expect to offer in the near-term.”

Throughout the first quarter, Goldman Sachs has been working towards offering crypto products as it rebooted its bitcoin trading desk from 2018, filed for an ETF to provide indirect exposure to BTC, and reported “rising” client demand.

Another big name Morgan Stanley is reportedly on track to place clients into its bitcoin funds starting in April.

The investment banking giant is, according to Rich, is looking to offer a “full-spectrum” of investments in digital assets that ultimately range from physical bitcoin to derivatives and traditional investment vehicles.

It is basically all about demand for Bitcoin from the customers, and “there’s a contingent of clients who are looking to this asset as a hedge against inflation, and the macro backdrop over the past year has certainly played into that,” Rich said.

She further said that “a large contingent of clients” also feels like we’re at the dawn of a new Internet and are looking for ways to participate in the crypto space.

While the ecosystem is still at its “very nascent stages,” she said, “it will be part of our future.”

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Author: AnTy

Big Uptick in 1k BTC Addresses Shows Institutions Bought the Dip

Big Uptick in 1k BTC Addresses Shows Institutions Bought the Dip; Goldman Sachs says Still Just 1% of Institutional Money

Despite the healthy pullback, more correction cannot be ruled out yet but $30k will be protected because many institutional investors bought around this level.

Bitcoin is taking a breather and hovering around $35,000 after the deep pullback earlier this week. This profit-taking at an ATH of $42,000 was expected after Bitcoin rallied more than 1,000% from the March 2020 lows.

“There’s signs that retail investors are taking profit,” said Ryan Rabaglia, OSL’s global head of trading. “Heightened volatility is often correlated with an uptick in retail participation.”

The market is particularly focusing on the US Dollar Index right now, which has been gaining strength, currently hovering around 90.

“We think a pullback is healthy,” said David Grider, the digital strategist at Fundstrat Global Advisors. According to him, the recent price action doesn’t indicate that Bitcoin has topped out.

However, further losses can’t be ruled out either, with miners continuing their selling while no significant stablecoin inflows in the picture. No outflows are seen from Coinbase either; as a matter of fact, BTC is flowing into exchanges.

On the basis of this, “We might have second dumping,” said Ki Young Ju, CEO of data provider CryptoQuant.

Still, $30k will be protected, and in the event of a dip, we might not go down below $28k because “there are many institutional investors who bought BTC at the 30-32k level,” Young Ju added.

These institutions were actually into buying the dips that came on Sunday and Monday. The large amounts of BTC holders that can be seen as a proxy for institutional adoption “increased significantly” since the start of 2021. This jump in address with at least 1,000 BTC shows that this institutional adoption is here to stay.

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However, according to Goldman Sachs’ Jeff Currie, the level of institutional investment in the market is still very small though “the market is beginning to become more mature.”

“The key to creating some type of stability in the market is to see an increase in the participation of institutional investors, and right now they’re small,” said the investment bank’s head of commodities research on CNBC., adding that the investment in BTC is, “roughly 1% of it is institutional money.”

While for institutions, Bitcoin is a hedge against fiat debasement and risk of inflation, as it emerges as a store of value, for some, it is a way to fix economic injustice as well.

“For the first time in history, we have a Plan B option to the current financial system which has seen years of redlining, racial discrimination and other egregious acts by retail banks to the Black community,” said Isaiah Jackson, author of “Bitcoin & Black America.”

According to him, Bitcoin gives Black people an opportunity to not only shift their money but also their mindset because the world’s leading digital currency is unconfiscatable and has no barrier to entry.

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Author: AnTy

Cryptocurrency Exchange, Coinbase, Hires Goldman Sachs for IPO Plans

San Francisco-based cryptocurrency exchange Coinbase has hired Goldman Sachs Group to lead the preparations for its stock market listing, reported Reuters, citing a person familiar with the matter.

Coinbase revealed that it has confidentially applied with the US Securities and Exchange Commission (SEC) to go public.

As we reported, a cryptocurrency company to list on the stock market is huge news for the industry. Messari valued the company at $28 billion following this announcement, raised from the $8 billion valuations it got during its last funding round.

Coinbase has been rumored to go public for a long time now, and it started making plans for the listing in July.

Founded in 2012 by CEO and board director Brian Armstrong and board director Fred Ehrsam, Coinbase has raised $525 million to date.

Coinbase’s filing comes after multiple startups, including Airbnb, DoorDash, Wish, Roblox, and Affirm, have filed to go public or have already gone public this year.

The crypto market is in full bull mode, with Bitcoin hitting yet another all-time high yesterday above $24,000. Armstrong wrote in a blog post cautioning newcomers to cryptocurrency,

“While it’s great to see market rallies and see news organizations turn attention to this emerging asset class in a new way, we cannot emphasize enough how important it is to understand that investing in crypto is not without risk.”

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Author: AnTy

Macro Investor Raoul Pal Goes ‘Irresponsibly Long’ on BTC, But More Bullish on ETH

You got faith in it; bet everything on it. This seems to be the philosophy of Raoul Pal, a former Goldman Sachs hedge-fund manager who announced over the weekend that he is going all-in in Bitcoin.

However, he did clarify that he can afford to take this road and cautioned others to do the same as him and “do your own research and size accordingly.”

By betting his 98% liquid net worth, Pal has beaten another vocal Bitcoin bull Anthony Pompliano who says his 90% investment is in BTC. But as Pal points out, he is

“older and in a position to take more risk. And it is risk, no guarantees.”

The prominent bitcoin bull is putting it where his mouth is as he prepares to sell all of his gold and invest it all in Bitcoin and Ethereum. Pal, the co-founder of Real Vision tweeted,

“I have a sell order in tomorrow to sell all my gold and to scale in to buy BTC and ETH (80/20). I don’t own anything else (except some bond calls and some $’s). 98% of my liquid net worth. See, you can’t categorize me except #irresponsiblylong.”

While only 20% of the latest investment is in Ethereum, Pal has a “hunch” that it would be Eth that would beat Bitcoin in price performance. Explaining the reason behind his 80/20 allocation, he said,

“I think ETH outperforms possibly by 5 to 1 but who knows. BTC is the easy bet.”

It would be no surprise if Eth actually outperforms Bitcoin because it did so in the last cycle too.

Compared to Bitcoin’s 1,300% gains in 2017, ETH rallied 9,162% the same year. Moreover, while BTC is just over 7% away from its all-time high of $20,000, ETH has yet to surge 63% to reach its all-time high of $1,570.

In terms of year-to-date performance as well, ETH has gained 341% to Bitcoin’s 156% while trading at $575 and $18,470, respectively.

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Author: AnTy

Goldman Sachs New Digital Asset Manager Reveals Plans to Bring A ‘Digital Token’ to the Bank

  • U.S. financial giant Goldman Sachs is pushing forward its plans to launch a digital asset with the appointment of its new digital asset manager, Mathew McDermott, former head of the bank’s investment internal funding operations.
  • McDermott confirmed the bank is looking into a digital asset of its own.

According to CNBC, Goldman Sachs is rejuvenating its efforts towards a digital asset with the appointment of Mathew McDermott as its new head of digital assets. McDermott replaces Justin Schmidt to radically transform the traditional financial system and embrace digital technologies like blockchain to create a digital finance market ecosystem. He said,

“In the next five to 10 years, you could see a financial system where all assets and liabilities are native to a blockchain, with all transactions natively happening on chain.”

In his pragmatic and radical approach in transforming the digital assets section of the bank, Mathew McDermott will start by digitizing the $1 trillion repurchase agreements (repo) market. Blockchain aims to reduce the costs and inefficiencies of the crumbling repo market, a market “ripe for standardization,” he explained.

“By leveraging distributed ledger technology, you can standardize processes to manage collateral across the system, and you have a much more efficient settlement process given the real time settlement.”

Mathew further said Goldman Sachs will explore digitized systems and the benefits to the credit and mortgage markets by partnering and discussing with other financial institutions and banks in a bid to build a stable network.

Read More: Is Goldman Sachs The Latest Bank To Jump On The Bitcoin Bandwagon?

The Goldman Sachs digital token

Mathew further said the bank is focusing on plans to launch its own digital token in the future if possible use cases are realized.

“We are exploring the commercial viability of creating our own fiat digital token, but it’s early days as we continue to work through the potential use cases.”

The rise of blockchain technologies and associated cryptos is posing a threat to the overall finance market as we know it. Despite the implications, McDermott is looking forward to being successful stating,

“With any technological advancement, there will be a disruption to the existing status quo.”

He did not reveal any crypto holdings but believes the cryptocurrency market is facing a resurgence. He explained the bank has “seen an uptick in interest across some of the institutional clients who are exploring how they can participate in [crypto] space.”

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Author: Lujan Odera

Grayscale Consuming 53% More Bitcoin than Minted Since Halving

Goldman Sachs’ call covering bitcoin on Wednesday left the crypto community disappointed after they said that the largest cryptocurrency is not an asset class and they do not recommend it to their clients.

The report compared bitcoin with the Tulip mania from the 1600s and further argued that it is used for illegal activities and is prone to hacks. But the market trend showcases a completely different picture.

For starters, Bitcoin price jumped over 4% and went above $9,000 despite the negative remarks from the investment bank. BTC is continuing its upwards movement from yesterday and it makes its way to $9,400.

Also, institutional interest in the crypto market has been picking up lately with the open interest on bitcoin futures and options at CME Group hitting new highs. The volume on Deribit, the leader in the bitcoin options space, has been growing steadily as well.

Now, as per crypto enthusiast and independent researcher Kevin Rooke, since the historic halving event on May 11, Grayscale Investments have bought 18,910 BTC.

“Wall Street wants Bitcoin, and they don’t care what Goldman Sachs has to say,” said Rooke.

What’s even more interesting is only 12,337 BTC has been mined since the halving which indicates a rapidly growing institutional demand for Bitcoin.

Technically, the BTC mined since halving till May 27th should be 14,400 because the event cut down the miner inflow in half, from 1800 BTC per day prior to halving to 900 BTC per day.

But the halving also caused a decline in hash rate and the time it has been taking to find the blocks increased from the regular 10 minutes to 14.3 minutes which is still sitting high at 10.4 minutes on May 26th despite the 6% downward difficulty adjustment to 15.14 terahashes per second. It was only today that the block time has fallen below 10 minutes. As such, the less number of newly minted BTC.

The week following the halving when issuance was cut in half, 6,300 new BTC were minted while Grayscale’s Bitcoin Investment Trust bought 12,021 BTC on $112 million in inflows.

“GBTC had a record $29.9M/week inflows in Q1. Hasn’t been below $60M/week the past month,” shared Dan Elitzer.

As of Q1 of 2020, Grayscale was holding 1.7% of all bitcoin and this demand was driven by institutional investors, heavily dominated by hedge funds, at 88%.

At that time, Grayscale noted that “large increases in dollar-denominated inflows relative to Grayscale AUM have historically preceded market rallies.”

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Author: AnTy

Goldman Sachs’ Lazy Bitcoin Assessment is Embarrassing

Crypto community has been eagerly awaiting Goldman Sachs’ client call today in which they were to discuss bitcoin. But it all turned out to be a complete disappointment, as had been expected and not what was hoped.

Godlman’s bitcoin explanation is centered around illegal activity, forks, and exchange hacks.

“Cryptocurrencies Including Bitcoin Are Not an Asset Class,” summarized Goldman.

Ouch!

But as Cameron Winklevoss of crypto exchange Gemini points out, CFTC has already declared bitcoin a commodity over four years back.

Interestingly, Goldman also foresaw Bitcoin’s commodity-like financialization as early as 2014. At that time, they also hinted at the potential future price of bitcoin at between $1,000 and $1 million.

Predictable & Unrealistic, Naive & Lazy

Last week, it came into notice that Goldman Sachs will be covering “Implications of Current Policies for Inflation, Gold and Bitcoin” today.

Now, before the call has to go live, the leaked images showed what the investment bank thinks about bitcoin and it’s not pretty or surprising, it’s all the same old, same old.

The world’s leading cryptocurrency, according to Goldman Sachs, does not generate cash flow, any earnings, diversification benefits, dampens the volatility, or shows evidence of hedging inflation.

What it does is “abet illicit activities” such as Ponzi schemes, ransomware, money laundering, and darknet markets.

Moreover, “cryptocurrencies as a whole are not a scarce resource,” argues Goldman pointing out the forks BCH and BSV.

What else? It is “susceptible to hacking or inadvertent loss,” Goldman says, mentioning QuardrigaCZ and Parity.

And Oh, it’s “Tulipmania” on steroids. In the year prior to their peaks, while Nasdaq rallied 109% and Tulip prices 485%, Bitcoin and Ethereum rose 2,292% and Ethereum 14,193% respectively.

Bitcoin is antithetical to Goldman’s business model

Simply put:

Goldman Sachs “believe that a security whose appreciation is primarily dependent on whether someone else is willing to pay a higher price for it is not a suitable investment for our clients,” states Goldman.

All of this because Goldman sees Bitcoin as competition and they don’t “gain anything by you buying BTC. No spread, no management fee, nothing,” said trader Cantering Clark. “You buying Bitcoin is antithetical to their business model,” he added. They also,

“believe that while hedge funds may find trading cryptocurrencies appealing because of their high volatility, that allure does not constitute a viable investment rationale.”

“I guess equities are now off limits?,” is Digital Currency Group founder and CEO Founder/CEO, Barry Silbert’s reaction to Goldman Sachs commentary on Bitcoin.

Dissing Gold Too

During the call, Goldman Sachs covered the macroeconomy where while talking about COVID-19 and GDP/economy risk, they projected Q3 to be a decent opening only to go downhill from there. They believe the “real numbers” for unemployment are far higher but calling it “not a depression.”

While they have zero concerns about inflation or debasing the US Dollar, they are more concerned with deflation. But believes negative interest rates are good for the economy.

“They are aggressively shitting on gold,” shared trader Scott Melker who live-tweeted Goldman’s client call that he was attending.

The precious metal also doesn’t offer any “reliable downside protection.”

“Don’t listen to what people say, watch what they do”

Not acknowledging the best investment of the last decade which is also outperforming most of the asset classes in 2020 so far doesn’t seem like a good call from the bank.

But it’s not like the bank is right all the time. Earlier this year, its analysts called for a $150-$200 price target for oil while it went down below zero last month.

Not to forget that, in mid-2017, the bank saw big declines in part due to bad market calls from its strategists.

The crypto community certainly didn’t take it lightly, given that Goldman didn’t even take its time to at least make well-informed and good criticism.

“It’s not that it’s a “bad call” – it’s just naive and lazy. It’s embarrassing,” said Peter Hans of Arca. “There are two types of people in FinServ, those who fear progress and those who embrace it.”

But does it really matter what they say. Jamie Dimon, the CEO of JPMorgan has been calling BTC a “fraud” only to turn around and profess his love for the technology and just this month the bank opened its services for bitcoin exchanges Coinbase and Gemini.

As such, the only take from all of this is, “’Don’t listen to what people say, watch what they do.”

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Author: AnTy