Goldman Sachs Ups Crypto Exposure, and Bitcoin Gains
This week, Bitcoin experienced some momentum with prices rising towards $40,000 before drawing back to 39,000. Prices have risen nearly 8% over the past week, stabilizing after brutal sell-offs in May. The week was also marked by interesting announcements in the crypto world, following last week’s big story of El Salvador becoming the first nation to adopt Bitcoin as legal tender.
Goldman Sachs Expands Crypto Trading with Ether Options
After the launch of their crypto trading desk in March of 2021, Goldman Sachs has signaled further interest in cryptocurrency yet again. The global investment bank now plans to offer investors futures and options trading in Ether — the world’s second largest cryptocurrency after Bitcoin. Head of digital assets at Goldman Sachs Mathew McDermott told Bloomberg that this was set to happen in the coming months.
Ether futures or options are a form of financial derivative that gives investors the right to buy or sell Ether at a specific price by a certain date. Investors pay a premium that is typically lower than the price of the cryptocurrency in order to buy an option, then take a speculative position on the coin in the future. This allows more timid investors to sink their teeth into the cryptocurrency market without the volatility that comes with it. It also enables investors to trade cryptocurrencies without ever actually owning the underlying asset.
Speaking on the matter, McDermott was quoted saying “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”. McDermott went on to add, “Institutional adoption will continue…Despite the material price correction, we continue to see a significant amount of interest in this space”. Goldman Sachs had previously allowed clients to deal in public-traded Bitcoin futures, while other major players like JP Morgan and Standard Chartered have also set up their own plans for crypto offerings to clients.
To learn more about Goldman Sachs’ Ether futures trading, click here.
Bitcoin Protocol Upgrade Welcomed by Crypto World
The first Bitcoin upgrade in four years has just been approved by Bitcoin miners across the globe and is due to take effect this coming November. Upon its announcement, the upgrade was welcomed by Bitcoin enthusiasts and the crypto community as it promises greater privacy and transparency of transactions. The upgrade is called Taproot and will allow for smart contracts on the blockchain — smart contracts are a feature that eliminate middlemen from complex transactions. Smart contracts also allow for the building of applications and businesses on the blockchain, a feature central to Ethereum.
The upgrade will revolutionize how digital signatures are created, reducing the exposure of miners’ and crypto holders’ keys on the chain which translates into additional layers of privacy. Taproot is also set to make smart contracts on the blockchain cheaper to execute and smaller in size, meaning enhanced functionality and efficiency on the Bitcoin blockchain.
The last Bitcoin upgrade took place in 2017 and was not as welcomed as Taproot which has nearly universal support from miners. The inclusion of smart contracts on Bitcoin’s blockchain could steal some of Ethereum’s decentralized app (dApp) thunder.
Musk Tweets, Influencers Bite, and Crypto Bounces
Prices of cryptocurrencies saw partial rebound this week coinciding with some expected tweets from Elon Musk, and some unexpected support from social media influencers.
The week began with a welcome tweet from Tesla CEO Elon Musk after much back and forth about Tesla not accepting cryptocurrencies, Musk quelled the market by ensuring that Tesla would resume accepting cryptocurrencies once greener options are available. This, along with market conditions, pushed both Bitcoin and Ether prices up.
In response to an article posted about a seeming pump and dump of Bitcoin done by him, Musk’s response tweet read, “When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions.” The Tesla CEO did not specify how he would assess such confirmation, but nevertheless, his tweet resulted in the price of Bitcoin jumping nearly 13% overnight.
The flood of other big name influencers continues to flow in with more pushing out paid promotional ads for cryptocurrencies to their hundreds of millions of followers – including Kim Kardashian who posted an advertisement on her Instagram stories for EthereumMax (EMAX) to her 228 million followers. While these endorsements may draw in mainstream interest, it’s not the first time that this type of influencer marketing has been used in the space. In fact, pushed out to hundreds of millions of people at a time, these endorsements may reflect positively on the market as more young people buy in.
Hedge Funds Plan To “Significantly” Increase Crypto Exposure
Translating into nearly 300 billion in digital currencies across the crypto market, a survey of 100 hedge fund chief financial officers around the world has revealed that these executives plan to hold an average of 7% of their assets in cryptocurrencies in five years’ time.
This showcases a healthy appetite for crypto amongst traditional investors, ones that are normally committed to holding traditional stocks and bonds. Still, during this economic climate, it appears as though even the most mainstream of investors are looking for a hedge against inflation — something cryptocurrencies have positioned themselves as.
At the time of publishing, Bitcoin traded at $38,800 and Ether stood at $2,420.