Goldman Sachs has started offering Bitcoin futures as a product to its clients following a partnership with Galaxy Digital, a crypto investment firm founded by billionaire Mike Novogratz.
The bank is using Galaxy Digital as a counterparty to offer these BTC futures, and this is the first time it has done so through a digital assets firm since setting up its cryptocurrency desk last month.
The bank’s head of digital assets for the Asia-Pacific region Max Minton said moving more BTC into the institutional market would cap Bitcoin’s volatility, as more banks continued to allow more clients, including hedge funds, to trade Bitcoin.
“You’re moving the market participants from being north of 90% retail, a huge chunk of which have access to ridiculous amounts of leverage, into an institutional community, who have proper, tried-and-tested rules and regulations about leverage, asset-liability mismatch, and risk,” “The more activity that moves into the institutional community, the less volatility there will be,” he said.
However, experts say that although Bitcoin futures allude to the continued acceptability of Bitcoin by banking and institutional fraternity, it may not necessarily help create BTC demand when the futures do not involve physically delivered Bitcoins.
Nevertheless, Bitcoin futures are a safe bet for banks. According to Minton, if clients kept asking, investment banks are obliged to “figure out” how to expose clients to assets like Bitcoin “safely” and “not to act as a fiduciary.”
He said working with Galaxy Digital was strategic because regulated banks can’t handle Bitcoin directly. To the bank, Galaxy Digital would provide “a broad range of liquidity venues and differentiated derivatives capabilities spanning the cryptocurrency ecosystem.”
Other banks to trade Bitcoin
According to Galaxy Digital co-president Damien Vanderwilt, the bank is acting as a first mover and may cause other banks to want to dip their toes in the Bitcoin market, in response to their client’s demands and due to the “fear of missing out.”
The bank’s head of digital assets for the Asia-Pacific region Max Minton said the bank’s goal was to offer their clients the “best-execution pricing” and “access to the assets they want to trade.”