Friday, May 7, 2021

"Goldman Offers New Bitcoin Derivatives To Wall Street Investors"

I suppose the long-only commodity index pitch is still a bit hard to sell after the last go-round.

From Bloomberg, May 6: 

Goldman Sachs Group Inc. is wading deeper into the $1 trillion Bitcoin market, offering Wall Street investors a way to place big bets. 

The investment bank has opened up trading with non-deliverable forwards, a derivative tied to Bitcoin’s price that pays out in cash. The firm then protects itself from the digital currency’s famous volatility by buying and selling Bitcoin futures in block trades on CME Group Inc., using Cumberland DRW as its trading partner. 

Goldman, which still isn’t active in the Bitcoin spot market, introduced the wagers to clients last month without an announcement. “Institutional demand continues to grow significantly in this space, and being able to work with partners like Cumberland will help us expand our capabilities,” said Max Minton, Goldman’s Asia-Pacific head of digital assets. 

The new offering is “paving the way for us to evolve our nascent cash-settled crypto-currency capabilities.” Goldman Sachs, which restarted a trading desk this year to help clients deal in publicly traded futures tied to Bitcoin, said in March it was also close to offering private wealth clients additional vehicles to bet on crypto prices. 

But the push into forwards dramatically increases its capacity to help big investors take positions. The partnership with Cumberland underscores the bank’s willingness to work with outside firms to help it do so, according to people familiar with the matter, speaking on the condition they not be identified....