Goldman Sachs Sees Surge In Crypto As Hedge Funds Return

NEW YORK, NY Monday, April 1, 2024 – Goldman Sachs is reporting a resurgence of interest in cryptocurrency options trading among its hedge fund clients, according to a recent interview with Max Minton, the bank’s Asia Pacific head of digital assets. ¹

Minton attributes this renewed interest to the recent approval of cryptocurrency exchange-traded funds (ETFs) in the United States. He noted that “many of our largest clients are active or exploring getting active in the crypto space.”

Goldman Sachs launched its crypto trading desk in 2021 and currently offers cash-settled Bitcoin and Ether options trading, along with CME-listed Bitcoin and Ether futures. The bank does not directly trade the underlying cryptocurrencies themselves.

Minton observes an increase in client activity compared to 2023: “It was a quieter year last year, but we’ve seen a pickup in interest from clients in onboarding, pipeline, and volume since the start of the year.”

The majority of demand stems from Goldman’s existing client base, primarily traditional hedge funds. However, the bank is expanding its reach to include “a wider universe of clients” such as asset managers, traditional bank clients, and select digital asset firms.

According to Minton, clients are utilizing crypto derivatives for various purposes, including directional bets on cryptocurrency prices, yield enhancement strategies, and portfolio hedging.

Bitcoin remains the primary focus for most clients, although interest in Ether-based products could shift if Ether ETFs gain approval in the United States.

Beyond trading, Goldman Sachs is actively involved in tokenizing traditional assets using blockchain technology. The bank’s GS DAP platform facilitates this process. Additionally, Goldman Sachs recently participated in a pilot test on a blockchain network connecting banks, asset managers, and exchanges.

The bank is also strategically investing in blockchain infrastructure firms, underscoring its commitment to the development of the digital asset market structure.

Sources