Goldman Sachs Goes All Out for Ethereum
Goldman Sachs spent the spring months demonstrating an overt proponency of Ethereum, a cryptocurrency which is at the forefront of technological development and has captured the minds of many enthusiasts, whilst dividing the opinion of the self-styled disruptors including Elon Musk.
The continual high profile interest in Ethereum by Goldman Sachs, one of the world’s largest investment banks whose relatively conservative core business activities would usually not favor a move into cryptocurrency was clearly not without purpose, as today, the bank has made history and contributed to reaching an important milestone in the ever-increasing alignment with mainstream financial services and capital markets that cryptocurrency is now experiencing.
Today, Goldman Sachs announced that it is adding Ethereum as a tradeable asset, and will be offering options and futures trading in Ethereum, with a launch date yet to be announced and analysts considering that it may become available within the next few months.
Goldman Sachs has taken a very avantgarde direction with regard to offering cryptocurrency as part of its trading portfolio, and began demonstrating a positive view of Ethereum a few weeks ago, just a short time after relaunching its Bitcoin trading desk.
Just after the now infamous flash crash in May which resulted in 5 major cryptocurrencies having approximately $700 billion wiped from their combined value overnight, Goldman Sachs waded into the fray and stated that it expected Ethereum, which at the time had a market capitalization of $250 billion – less than half of that of Bitcoin – could potentially outstrip Bitcoin as the number one store of value.
The bank called Ethereum the “Amazon of information”, a statement which was subsequently leaked onto a Twitter feed along with part of an internal report by the bank which demonstrated the internal corporate view on Ethereum in an extremely positive light.
One of the aspects favored by Goldman Sachs is that the topographical structure of Ethereum supports smart contracts and therefore has an in-built means for users to build applications on its platform. This goes hand in hand with Goldman Sachs’ enormous, multi-million dollar project around 7 years ago in which the company invested in blockchain development for the purposes of using its own distributed ledger system which it could roll out for various purposes.
Goldman Sachs’ interest in the technological versatility of Ethereum extends further. The bank stated in its report that the majority of decentralized finance (DeFi) applications are built on the Ethereum network and most NFTs that have been issued are currently purchased using Ethereum, hence deducing that due to the larger number of transactions, Ethereum may well become dominant.
This interest in the underpinnings of Ethereum is very interesting, however the bank’s decision to allow options and futures trading in Ethereum represents a different direction for the bank, unless it wishes to offer trading and at the same time begin to utilize the technological aspects in other areas of the business whilst being able to fully trade Ethereum on the open market and take its part in being a market maker for the cryptocurrency, which in turn would perhaps give Goldman Sachs a means of influence, hence making it more able to harness the technology that it is interested in.
Despite the crash in May, Goldman Sachs is confident that there will be a large market for its Ethereum options and futures, with the company having experienced a lot of interest from customers who now see the current value as a good entry point, and these customers are not simply retail speculators, some are hedge funds.
Goldman Sachs may well be going all out on cryptocurrency, and it certainly has shown its cards as a proponent, especially now that it has not only encapsulated the technological advantages and is also about to offer options and futures in Ethereum, but has also been keen to invest in cryptocurrency startups, too.
Now that’s a change of direction, where the old school banks, once the target of cryptocurrency disruptors in the quest for a peer-to-peer beating of the ‘banksters’, are now on board and aligned with the geniuses of the crypto world.