Goldman Sachs Re-Enters the Crypto Arena Amidst Client Demand for Spot Bitcoin ETFs

Goldman Sachs' clients are re-entering the crypto market following the approval of spot Bitcoin ETFs in the US. According to Max Minton, head of digital assets for Goldman Asia Pacific, the recent ETF approval has spurred interest in crypto, particularly among hedge funds. Goldman's clients are primarily using derivatives to gain exposure to crypto volatility and make mid-term price predictions, with Bitcoin-related products being the most popular.

Is Goldman Sachs Back in the Crypto Game?

Goldman Sachs's clients are reportedly jumping back into the crypto market, emboldened by the recent approval of spot Bitcoin ETFs. According to Max Minton, head of digital assets for Goldman Asia Pacific, many of the firm's largest clients have recently become active or are exploring opportunities in the crypto sector.

What's Driving the Appetite?

Minton attributes the renewed interest to the approval of ten new Bitcoin ETFs in the United States, which have legitimized crypto assets as a more integral part of traditional markets. "The recent ETF approval has triggered a resurgence of interest and activities from our clients," Minton said.

Who's Getting Involved?

The bulk of the fresh demand comes from existing Goldman clients, particularly hedge funds, who are accessing crypto exposure through the firm's options and futures offerings. Goldman Sachs reported a record $2.8 trillion in assets under management at the end of 2023.

Spot Crypto Products on the Horizon?

Despite launching its first crypto trading desk in 2021, Goldman currently does not offer any spot crypto products to its clients. The desk only provides exposure to crypto derivatives, such as Bitcoin and Ether options and futures. However, Minton hinted at the possibility of expanding into spot crypto products in the future.

Crypto as a Volatility Play

Goldman's clients are primarily using their derivatives to gain exposure to the volatility of crypto and make weighted predictions on price movements in the mid-term. Bitcoin-related products remain the most popular investment vehicles among active clients.

Ether ETF Approval: A Game-Changer?

Minton believes that the potential approval of a spot Ether ETF in the U.S. could shift institutional clients toward Ether. However, Bloomberg ETF analysts estimate the chances of an Ether ETF approval by May at only 35%, with the SEC's silence on the matter seen as bearish.

Expanding the Crypto Universe

Regardless of ETF approvals, Goldman plans to expand into a wider universe of clients, including asset management funds, banks, and more specialized crypto asset firms. Minton's optimism suggests that Goldman Sachs is betting on the long-term growth of the crypto market and the potential for it to become a more mainstream asset class.