Wall Street giant Goldman Sachs is now all in when it comes to allowing clients trade in Bitcoin futures through one of its New York branches. The multinational financial services company becomes the first regulated financial institution to offer such service. One of the reasons the firm decided to go on this route is due to the number of inquiries received from hedge funds, foundations and endowments that received contributions from Bitcoin millionaires. Will this move by Goldman Sachs increase confidence in the controversial digital currency?
The Summary: What You Need to Know
News of Goldman Sachs facilitating the institutional trading of Bitcoin has raised the bar of legitimacy for digital currencies. The firm is proceeding cautiously and won’t be trading actual bitcoin for now. Rather, they will use its money to trade bitcoin futures contracts for clients. Additionally, it will trade non-deliverable futures where trades will be paid in the regulated currency it is offered.
Bitcoin has been bouncing back in the past couple of months. There has been a growing interest in the said currency over the course of 2017, which also resulted to the skyrocketing of its volatility. Bitcoin’s price grew three times over in the second half of last year, reaching a record high of $20,000 before it dropped to $8,000 in the first quarter of 2018. Bitcoin traded as high as $9,900 before South Korean officials raided UpBit, it’s largest cryptocurrency exchange, which resulted to an $ 8,650 price drop.
As Goldman Sachs dives into the crypto markets, CultureBanx discovered that BitMEX is already way ahead in the game.
BitMEX CEO Arthur Hayes leads this prominent cryptocurrency derivative exchange. BitMEX offers derivative products to retail investors and boasts of a daily trading volume of almost $3 billion. The company made an impressive $83 million in revenue last year and recorded a $21 million revenue just January this year. The company is eyeing on exceeding its 2018 performance.
“This is the best thing you could ever have. We make more money when the market goes down. We love this volatility,” Hayes said.
While institutional investors participate in these derivatives, they’ll be looking to relax their restraint by having a reliable criterion for their performance.
Mike Novogratz, Goldman Sachs alumnus and cryptocurrency advocate, recently announced a partnership with Bloomberg to launch Bloomberg Galaxy Crypto Index which will track the performances of 10 of the most liquid cryptocurrencies.
“This is just one more building block in the foundation which will get, at one point, pension funds and family offices and sovereign wealth funds all participating in the crypto economy,” said Novogratz.