Goldman Sachs hedge fund clients are piling back into crypto this year

Goldman Sachs’ clients have reportedly started to make the jump back into crypto this year, with appetite renewed by the approval of spot Bitcoin (BTC $67,205) exchange-traded funds.

Max Minton, head of digital assets for Goldman Asia Pacific, said that many of his firm’s largest clients had recently become active or were “exploring getting active” in the crypto sector, according to a March 24 report from Bloomberg.

Minton added that much of the increased appetite for cryptocurrency stems from the approval of ten new Bitcoin ETFs in the United States in January, which rubber-stamped the crypto assets as being a more integral part of traditional markets.

“The recent ETF approval has triggered a resurgence of interest and activities from our clients.”

Minton explained that the bulk of the fresh demand comes primarily from Goldman’s existing clients by way of his firm’s options and futures offerings, with hedge funds being the most involved of its clients.

Goldman Sachs reported a record $2.8 trillion in assets under management at the end of 2023.

Notably, Goldman currently does not offer any spot crypto products to its clients, despite having launched its first crypto trading desk in 2021. The desk only provides exposure to crypto derivatives, including Bitcoin and Ether (ETH $3,468) options and futures.

“It was a quieter year last year, but we’ve seen a pickup in interest from clients in onboarding, pipeline, and volume since the start of the year,” Minton said.

Minton said that Goldman’s clients were primarily using their derivatives to gain exposure to the volatility of crypto as well as making weighted predictions on where prices were headed in the mid-term.

Bitcoin-related products stood as the most popular investment vehicles among active clients, added Minton.

Minton also looked to the potential approval of a spot Ether ETF in the U.S. as potentially shifting his firm’s institutional clients toward Ether.

However, Bloomberg ETF analysts have pegged the chances of an Ether ETF approval by May at just 35%, with the Securities and Exchange Commission’s prolonged “radio silence” to would-be fund issuers being seen as increasingly bearish.

Source: Eric Balchunas

Regardless of an ETF approval, Minton added that Goldman would seek to expand into “a wider universe of clients,” including asset management funds, banks, and more specialized crypto asset firms in the future.