Goldman Sachs has partnered with Galaxy Digital to trade Bitcoin futures more actively. This is the first time that Goldman Sachs has used counterparty services to work with a cryptocurrency. Amid growing demand from institutional clients, the company reopened its digital asset trading division last month after a three-year hiatus. The department is part of a bank in the United States, a division of global markets.
Galaxy Digital will be the liquidity provider for the investment bank. He will trade CME Group Bitcoin futures.
Liquidity providers, also known as market makers, collect huge amounts of a given asset before selling it to the next interested party. This means that Goldman Sachs customers can always purchase bitcoins regardless of market conditions.
Goldman becomes the second largest investment bank in the past four months to close deals with Galaxy Digital. Galaxy said in March that Morgan Stanley has begun offering asset management clients access to some of its bitcoin funds.
Is Bitcoin an asset class or not?
At the end of May, the head of the digital assets department of Goldman Sachs, Matthew McDermott, emphasized that Bitcoin has become an investment asset that is in the stage of adoption.
However, a new report from Goldman Sachs says Bitcoin has no long-term value and is not an asset class.
At the same time, Galaxy Digital co-president Damien Vanderwilt said that if a product is requested by a sufficient number of trading clients, investment banks are required to provide it.
Max Minton, head of digital assets at Goldman Sachs, noted that the bank is responding to requests from its customers.
“Our goal is to provide our clients with the best prices and secure access to the assets they want to trade. This will now include cryptocurrency in 2021. And we are delighted to find a partner with a wide range of liquidity venues and differentiated derivatives capabilities spanning the cryptocurrency ecosystem”.
Vanderwilt also noted that the move by Goldman Sachs is likely to encourage other major banks to try cryptocurrency. And as more banks allow their institutional clients to trade Bitcoin, the notorious cryptocurrency volatility will inevitably decrease.
Loud Galaxy Digital footsteps
The partnership with Goldman Sachs is one of several high-profile steps, taken by Galaxy in recent months. Including a series of acquisitions by digital asset management firms. Acquisitions include Vision Hill and BitGo, the latest of which Galaxy bought for $ 1.2 billion in May. Galaxy has announced that Vision Hill will become part of Galaxy’s fund management division. New York-based Vision Hill develops market analytics products such as hedge fund indices and a buy-side database called VisionTrack for institutional clients.
The Galaxy acquisitions have more than doubled the firm’s all-round revenues since 2020. And are part of its path to a U.S. listing later this year. Despite the stagnation in Bitcoin prices after falling more than 30% from a record high in May, institutional investors are still piling up the crypto asset on their balances.