Head of digital assets at Goldman Sachs says the investment bank plans to offer Ether options and futures trading as it expands the crypto trading products it offers clients
A few months after Goldman GS Sachs relaunched its crypto trading desk and started providing bitcoin exposure to key clients, it is now expanding into ether, the native token for Ethereum, by offering cash-settled futures and options contracts. Additionally, Goldman plans to grow its bitcoin offerings, launched earlier this year, with the addition of exchange traded notes tracking the asset. The news was first reported yesterday by Bloomberg.
In an interview Goldman Sachs’ Head of Digital Assets Matthew McDermott noted that “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.” He is likely referring to bitcoin and ether’s recent falls, along with most of the crypto market, from their recent all-time highs above $64,000 and $4,300 respectively. However, the market has rebounded in recent days, and both are up 5% over the last five days.
In addition to the crypto market starting to recover overall, many crypto and blockchain proponents are bullish on ether for a few specific reasons:
- In July it will be launching a key upgrade that will add more predictability to transaction fees, which had become prohibitively expensive in recent weeks before falling, as well as elements of scarcity and deflationary pressures on the asset.
- It is making meaningful progress in its long-awaited transition to a faster means of adding transactions that will allow the network to process 100,000 transactions per second.
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Additionally, the world’s-largest derivatives marketplace, the Chicago Mercantile Exchange, began offering ether futures in February, providing a vehicle for investors to access cash-settled derivatives, which have gotten off to a good start in the first few months of trading. In fact, it could be said that a large portion of it came at the expense of bitcoin futures demand. Open interest in ether futures grew by 99% since the beginning of April (when the first data became available), compared to a 23% decline seen in bitcoin futures over the same period.
While it is too early to tell if this cannibalization is temporary or a sign of things to come, it is clear that there is demand for the offering. Wealthy retail traders and corporate buyers have been behind the majority of the ether futures buying interest, while hedge funds have provided the vast majority of the selling interest. One could expect that Goldman clients would take the buy side of these trades initially to reflect their bullish mentality.
This trend is the latest indication that despite the current market volatility, institutional investment in the industry, especially for its flagship assets, remains strong.