Futures are financial instruments that allow traders to bet (usually with ‘leverage’) on the price movements of underlying assets without the need to hold that asset. This helps avoid the many issues related to custody and regulations, especially in the cryptocurrency market.
Goldman’s change of tone
Roughly a year after denouncing cryptocurrencies as a nonasset class, the US multinational investment bank and financial services company opened up to Bitcoin (BTC) and is currently diving deeper into the Ethereum ecosystem.
In May, the company restarted a trading desk, which helps their clients deal in publicly traded futures tied to Bitcoin, and in the following months, the bank plans to offer options and futures trading in Ethereum, according to McDermott who helped shape the company’s crypto ambitions.
“We’ve actually seen a lot of interest from clients who are eager to trade as they find these levels as a slightly more palatable entry point,” said McDermott, who was named head of the cryptocurrency efforts last year and since has been expanding his crypto team.
He added, “We see it as a cleansing exercise to reduce some of the leverage and the excess in the system, especially from a retail perspective.”
Ethereum spurring clients’ interests
In May, Goldman led a $15 million investment into Coin Metrics, a cryptocurrency and blockchain data and analysis provider and McDermott joined the company’s board.
Goldman Sachs leads $15 million Series B investment in Coin Metrics.
— CoinMetrics.io (@coinmetrics) May 5, 2021
“We are looking at a number of different companies that fit into our strategic direction,” the head of crypto efforts said, regarding their latest Ethereum driven plans, adding that his communication with clients reveals their crypto ambitions:
“Despite the material price correction, we continue to see a significant amount of interest in this space.”
In last week’s survey of 850 institutions, Goldman Sachs discovered that almost 10% are trading crypto, and every 5th is interested in it.
As more investors keep discovering lucrative opportunities within the wast crypto space, fewer put their money in centralized banks, causing them worries and, apparently, slowly spurring their evolution.
As McDermott said: “Institutional adoption will continue.”
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