Resurgence of Interest in Cryptocurrencies Among Goldman Sachs Clients
Goldman Sachs sees significant uptick in hedge fund client interest in cryptocurrencies ahead of Bitcoin halving event. The bank is expanding its clientele to include asset managers and digital asset companies, with Bitcoin derivatives as a primary focus. The data suggests that Bitcoin’s value could skyrocket after the halving, supported by the stock-to-flow model that predicts a rise to $130,000.
Global investment bank Goldman Sachs indicated that hedge funds have experienced a notable increase in demand for cryptocurrency-related products, following the approval of Bitcoin ETFs in the United States.
Specifically, the approval of ten new Bitcoin spot ETFs in the United States in January has led to an increase in hedge funds’ “interest and activities” in crypto markets, according to a Bloomberg report citing Max Minton, head of Asia Pacific digital assets at Goldman Sachs.
Minton pointed out that “Last year was a quieter year, but since the beginning of the year we have seen an increase in client interest in terms of incorporation, portfolio and volume.”
According to the report, this approval has sparked growing enthusiasm among investors, who see cryptocurrencies as an opportunity for diversification and potential returns in their investment portfolios. The entry of hedge funds into this emerging market highlights the growing acceptance and adoption of cryptocurrencies in the traditional financial sphere.
In fact, although Goldman Sachs launched its first crypto trading desk in 2021, it does not currently offer spot cryptocurrency products to its clients. The desk focuses on providing exposure to crypto derivatives, such as Bitcoin and Ethereum futures and options.
Crypto Boom in Hedge Funds Following Approval of Bitcoin ETF in the United States, Says Goldman Sachs
Max Minton added that “The recent approval of ETFs has led to a resurgence of interest and activities from our clients. “Many of our largest clients are active or exploring the possibility of becoming active in this space.”
Goldman’s current clientele, primarily conventional hedge funds, generates most of the interest. Additionally, the entity is expanding its reach to cover a diverse range of clients. These include asset managers, their own banking clients and some companies specializing in digital assets.
Minton mentioned that clients use cryptocurrency derivatives to make speculative predictions, improve returns, and hedge. He also noted that Bitcoin-related products continue to attract the most attention from customers.
Impact of Bitcoin Halving on Cryptocurrencies
Following the 2012 halving, Bitcoin’s market capitalization skyrocketed more than 8,000%. Similarly, after the 2016 halving, the value of Bitcoin saw an increase of more than 1,400%. Meanwhile, it saw an increase of more than 700% following the 2020 halving.
Although the stock-to-flow (S2F) model, typically applied to commodities such as gold, has its flaws, it serves as a method for assessing the value of Bitcoin. This model has demonstrated a historical correlation with Bitcoin price fluctuations.
Expectations of Growing Interest in Ethereum Products Given Possible ETF Approval in the US
Although most interest remains in Bitcoin-related products, Max Minton expects interest in Ethereum-related products to increase, should Ethereum ETFs also gain approval in the United States.
According to Bloomberg ETF analysts, the chances of an Ethereum ETF being approved before May are only 35%. Since the prolonged silence of the United States Securities and Exchange Commission (SEC) is considered increasingly bearish.
Goldman Sachs has plans to expand to a broader universe of clients in the cryptocurrency space. According to Minton, the firm is looking to include asset management funds, banks and more specialized crypto asset companies in the near future.
By Leonardo Perez