Financial institutions around the world are scrambling to launch Bitcoin trading services. It will be interesting to see who wins this race, although Goldman Sachs may be the first firm to cross the finish line. Their current plan is to launch derivatives trading rather than actually trade Bitcoin. It seems to make a lot of sense at this stage, although it is not the outcome most people had expected.
With so many financial institutions preparing to offer cryptocurrency trading services, the competition will be worth keeping an eye on. Although mainstream media outfits claim these firms will launch a Bitcoin trading desk, that may not be the initial plan at this time. Goldman Sachs, for example, has confirmed its interest in trading cryptocurrencies, but they will not do so by buying and selling the cryptocurrencies themselves.
Instead, the current plan of action revolves around using some form of Bitcoin derivatives for trading purposes. This is only the first step in launching a full-fledged cryptocurrency trading venture, but it is a pretty interesting development regardless. This “small” dip into the cryptocurrency waters simply makes a lot more sense than going all in from day one.
Trading Bitcoin futures is nothing new in the financial world either. Both Cboe and CME already offer this functionality as of right now, although their volume is not exactly spectacular at this point in time. The volume is going up every month, but it still represents a drop in the bucket as far as global Bitcoin trading is concerned. It is evident institutional investors want to be exposed to Bitcoin, but they aren’t going all in just yet.
Indeed, it seems to make a lot of sense for Goldman Sachs to stick with futures. Buying and selling BTC directly poses logistics and security challenges the firm simply doesn’t want to deal with right now. No one wants to risk getting hacked because of their involvement in cryptocurrency. This also means the trading desk plans have been delayed, although no one knows for sure if and when such a product will be offered by Goldman Sachs.
When Bitcoin futures trading will begin remains to be determined. Some sources claim this could happen as early as late May or early June, although there is no official launch date as of right now. It will be interesting to see if the Goldman Sachs venture will attract more institutional investors than Cboe and CME, yet that seems highly unlikely. A proper Bitcoin trading desk, on the other hand, would attract a lot more attention.
How the Bitcoin community will respond to this development – or lack thereof – remains to be seen. It is evident people have high hopes that institutional money entering the cryptocurrency space will push all prices to new all-time highs this year. It may not have much of an effect right now, although in the long run, the bullish price trend remains visible. Bitcoin and its cohorts are in a good place right now despite a rough start to the year.
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