In brief
- Goldman recently opened up its Bitcoin trading desk.
- Now, it's going after big spenders.
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Goldman Sachs, a global investment bank with over $2 trillion in assets under management, will begin allowing large investors the chance to bet on the future price of Bitcoin.
According to a report from Bloomberg, Goldman has begun using “non-deliverable forwards.” These are short-term futures contracts that pay cash to investors who can accurately predict the future price of Bitcoin. The two parties agree to a price; when the contract expires, the winning party earns the difference between the contracted price and the actual price.
With the move, Goldman positions itself to make money off of one of Bitcoin’s seemingly negative aspects: volatility. The price of Bitcoin has whipsawed between a record high of $63,512 and $49,278 in the last month. It’s currently priced in the middle at just above $56,000.
Though Goldman already added publicly traded Bitcoin futures this year, the NDF product allows it to reach larger investors, such as Wall Street firms.
The investment bank, in coordination with digital asset trading firm Cumberland DRW, will buy and sell in BTC futures on CME’s options markets.
CME claimed $4.7 million in revenue from Bitcoin futures trading in the first quarter. Though it’s the main spot for traditional investors to trade BTC futures, crypto derivatives exchanges Binance, Huobi, OKEx, Bybit, FTX, and BitMEX all report larger trading volumes.
“Institutional demand continues to grow significantly in this space, and being able to work with partners like Cumberland will help us expand our capabilities,” Asia-Pacific Head of Digital Assets Max Minton told Bloomberg.
In an April earnings call, Goldman CEO David Solomon indicated the firm was closely watching Bitcoin but that it was hamstrung by regulations. “Of course, we need to operate within the current regulatory guidelines,” he said. “For example, we cannot own Bitcoin or trade it as a principal.”
With Bitcoin futures settled in cash, it won’t have to.