Goldman Sachs Is Entering the Cryptocurrency Market
Goldman Sachs Group is reportedly setting up a cryptocurrency trading desk, sources familiar with the matter said, signaling a profound shift in Wall Street’s attitude toward the digital asset class.
Goldman Embracing Crypto
Bloomberg reported Thursday that Wall Street’s largest investment bank is setting up a trading desk to make markets in cryptocurrencies such as bitcoin. The business will be up and running by the end of June once security issues have been resolved. Goldman is also exploring ways to hold the assets. Sources familiar with the matter also said the bank is setting up a team in New York to administer the new project.
In response to client interest in digital currencies, we are exploring how best to serve them,” Michael DuVally, a spokesman for the bank, said in a statement.
By venturing into cryptocurrency, Goldman Sachs would become the first large Wall Street bank to enter the alternative asset class. Unlike other banks, Goldman has been fairly receptive to the idea of cryptocurrencies, with CEO Lloyd Blankfein already announcing that his firm was exploring the possibility of entering the market.
J.P. Morgan Analyzing Bitcoin Futures
Blankfein’s approach to cryptocurrency diverges sharply from that of Jamie Dimon, who heads J.P. Morgan Chase & Co. Dimon has repeatedly chastised bitcoin, calling it a “fraud” that is bound to blow up sooner or later.
Dimon’s opinion of bitcoin hasn’t stopped his firm from dabbling in it. J.P. Morgan strategists are already analyzing the recently launched bitcoin futures contracts.
Regarding bitcoin futures, strategists Matthias Bouquet and Marko Kolanovic recently wrote:
“At a time when volatilities across asset classes have plummeted, this presents us with the oddity of an asset with extreme daily moves. Realized vols in BTC are unlike anything we’ve seen in other asset classes.”
CBOE became the first major exchange to launch a bitcoin futures contract. About a week later, CME Group also launched its own version of the bitcoin derivatives contract. It has been reported that Nasdaq is also entering the race for bitcoin futures, with a contract expected to hit the market sometime in the second quarter of 2018.
Despite another record-breaking year, bitcoin continues to be highly volatile. Bitcoin prices fell below $16,000 on Thursday and has shed $840 over the past five days.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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