The Goldman Sachs Group, Inc.
GS
and
Citigroup Inc
C
are plodding deep into the $1.1-trillion worth Bitcoin arena, garnering access to investors who want to place big bets. The news was reported by Bloomberg and Financial Times, for each firm respectively.
Goldman Sachs has launched trading with non-deliverable forwards, i.e. derivatives tied to Bitcoin’s price, which will be cash-settled. Additionally, the company will shield itself from the cryptocurrency’s fluctuations by trading Bitcoin futures in block trades on
CME Group Inc.
CME
, with Cumberland DRW as its trading partner.
Goldman Sachs, which reopened a trading desk earlier this year to help clients trade in Bitcoin-tied listed futures, had also wagered an interest to offer private clients additional vehicles to bet on cryptocurrency-linked prices. Nonetheless, this strive toward forward contracts dramatically enhances its ability to assist large investors take positions in the asset. The Cumberland partnership further accentuates the bank’s willingness to work with external firms to help in the process.
Banks are still prudent regarding regulatory challenges surrounding the ownership of Bitcoin outright. And since Goldman Sach’s new derivative offering is settled in cash, it does not require dealing with physical Bitcoin.
Furthermore, a number of foreign banks are contemplating taking the first step into cryptocurrency markets after an upsurge in interest or curiosity from their clients. Citigroup is the latest international bank to prod upon the option of providing cryptocurrency-related services after seeing the mammoth interest from its clients on the same.
Citigroup has been witnessing a “very rapid” build-up of interest in bitcoin across a wide spectrum of clients, including large asset managers.
The bank is yet to finalize if or not it will offer clients cryptocurrency-related services, but trading, custody and financing are all under consideration, as stated by the firm’s global head of foreign exchange, Itay Tuchman.
Our Take
Such an effort by both banks will likely boost the world’s most popular cryptocurrency asset’s prospects further, at least on grounds that Goldman Sachs and Citigroup are garnering cryptocurrency access to their clients.
The bitcoin rally has enticed big corporations, FinTech players and institutional clients to hold such digital assets. Investors have also been flocking to the flagship cryptocurrency on the back of acceptance from Elon Musk’s
Tesla, Inc.
TSLA
, which had disclosed about its $1.5-billion bitcoin purchase, driving the cryptocurrency to record highs, breaching $1 trillion in market capitalization for the first time ever.
Shares of Goldman Sachs have gained 70.3%, in the past six months, compared with Citigroup’s rally of 57%.
Both stocks presently carry a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
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