Goldman Hedge Funds Embracing Crypto Options as ETFs Fuel Enthusiasm

Are Crypto Options the New Darling of Hedge Funds?

Word on the street is that Goldman Sachs' hedge fund clientele are stepping up their game in the crypto options arena. This flurry of activity is reportedly a direct result of the green light given to spot Bitcoin exchange-traded funds (ETFs). As Max Minton, head of digital assets for Goldman Asia Pacific, points out, this shift is a testament to the growing interest and involvement from the firm's high-flying clients.

ETFs Ignite Crypto Enthusiasm

Minton's insights, shared in a Bloomberg report on March 24, reveal that this renewed crypto enthusiasm is largely fueled by the U.S. blessing of ten new Bitcoin ETFs. This milestone, achieved earlier this year, marked a watershed moment for crypto assets within the confines of traditional market structures.

"The recent ETF approval has sparked a surge in interest and activity from our clients," Minton notes.

According to Minton, the introduction of these ETFs has not only legitimized cryptocurrencies in the eyes of the financial establishment but also reignited Goldman's clients' passion for the sector. He explains that the bulk of this renewed focus is being channeled through Goldman's futures and options offerings, with hedge funds leading the charge. This surge in activity comes after a relatively quiet 2022, indicating a notable shift in market dynamics since the turn of the year.

"It was a more subdued year last year, but we've seen a noticeable pickup in client interest in onboarding, pipeline, and volume since the start of the year," Minton says.

Goldman's Crypto Ambitions

Despite Goldman Sachs' impressive $2.8 trillion in assets under management at the end of 2023, the firm currently steers clear of offering spot cryptocurrency products. Instead, its focus is on crypto derivatives, including Bitcoin and Ether options and futures, which were first introduced with the launch of its crypto trading desk in 2021. These products enable clients to navigate the choppy waters of the crypto market and make informed bets on price movements.

In addition to its derivatives offerings, Goldman Sachs is also delving into the world of tokenizing traditional assets using blockchain technology. The firm's involvement in this space includes the development of the GS DAP digital-asset platform and participation in a blockchain network pilot designed to connect banks, asset managers, and exchanges. Furthermore, Goldman's investments in startups, particularly those developing blockchain infrastructure, underscore its commitment to shaping the future of the digital asset market.