By
Bena Ilyas
April 18th, 2024
Goldman Sachs will continue working on cryptocurrency trading desk as well Bitcoin derivate products and clearing physical futures contracts.
On Wednesday, September 5, news of Goldman Sachs dropping its plan of crypto trading desk took the market by storm. A heavy correction gripped the crypto-market, soon after, with its valuation dropping by $12 billion. Since then, Bitcoin price has dropped by 15% and is currently trading at $6544, according to data on CoinMarketCap.
As it turns out, Goldman Sachs CFO Marty Chavez has snubbed-off these rumors while speaking at the TechCrunch Disrupt Conference, on Thursday. Chaves said:
“I was in New York yesterday and I was co-chairing our risk committee, and I saw the news article. It wasn’t like we announced anything or that anything had changed for us… I never thought I’d hear myself actually use this term, but I’d really have to describe that as fake news.”
The good news is Goldman Sachs is still not out of the game, but the bad news is that the damage is already done! The rumors succeeded in causing the FUD, but signs of recovery are seen nowhere. Chavez also specifically mentioned that there’s no specific timeline for its launch of the trading desk. He said:
“When we talked about exploring digital assets that it was going to be exploration that would be evolving over time,” Chavez said. “Maybe someone who was thinking about our activities here got very excited that we would be making markets as principal and physical bitcoin, and as they got into it they realized part of the evolution but its not here yet.”
Goldman Sachs to Launch a Bitcoin Derivative for Clients
Chavez during the conference said that the banking giant is working on a Bitcoin derivative because “clients want it.” He added:
“The next stage of the exploration is what we call non-deliverable forwards, these are over the counter derivatives, they’re settled in U.S. dollars and the reference price is the bitcoin-U.S. dollar price established by a set of exchanges.”
Goldman Sachs was also the first bank to clear CBOE and CME Bitcoin futures, launched last year in December 2017. However, these two Bitcoin futures are completely cash-settled. Meaning traders can hedge the price of Bitcoin without holding it physically. Goldman has still not entered into clearing Bitcoin futures which hold the cryptocurrency physically.
Chavez said that to arrive there, the bank first needs to launch a safe custody solution.
“Physical bitcoin is something tremendously interesting, and tremendously challenging,” he said. “From the perspective of custody, we don’t yet see an institutional-grade custodial solution for bitcoin, we’re interested in having that exist and it’s a long road.”
Bitcoin Won’t Recover Over $10000 This Year
According to Forbes, the possibility of Bitcoin recovering over $10000 by the year-end, looks slim. Forbes’ claims are based on the data provided by the interactive Bitcoin Price Estimator by Trefis. The estimator forecasts the monthly average price based on the transaction volumes and number of Bitcoin users. It then shows the possible price range for Bitcoin by considering the bullish and bearish outlook.
The Forbes article also talks about how Goldman’s decision to delay cryptocurrency trading would impact the crypto market.
The Trefis platform is created by MIT engineers and Wall Street analysts and helps users understand the impact of different products on a commodity’s price.