Goldman Sachs hasn’t been exceptionally coy about their involvement in the crypto markets. Specific to Bitcoin, from a volume standpoint, Goldman Sachs is one of the (if not THE) largest facilitators of OTC trades in the world. They routinely generate more than a billion in OTC trades on a quarterly basis; if the numbers given to us for Q4 are accurate.
Lending credibility to the belief that UHNW individuals, family offices, hedge funds, and other financial entities of scale are trafficking in Bitcoin. Buying, selling, holding in cold storage, wallet to wallet – Bitcoin is increasingly a vehicle for wealth ‘store of value’ in an uncertain global economy.
Speaking with two sources at Goldman Sachs who are facilitators in the OTC markets and aware of Goldman’s ability to broker transactions – it is clear that Bitcoin has begun to resonate with investors as ‘digital gold’.
One source had this to say: “Understand that Goldman banks a huge portion of UHNW families that trust the firm to make the right calls. Those families have seen Goldman invest in Circle and other Bitcoin-related firms and are increasingly comfortable with the digital currency. The narrative that is ‘bitcoin is digital gold’ has begun to take hold in the minds of investors. This has led to increased volumes late in 2018 and throughout the beginning of 2019. And if the global economy continues to soften, expect those volumes to continue to increase.”
The second source we spoke to over the weekend said the following: “OTC volumes have increased across the board. Global economic uncertainty and a ‘flight to safety’ now includes Bitcoin. That is why you are seeing an increase in volume year over year, and again to start 2019. Goldman is a MAJOR player here. They’ve got ‘first mover’ privileges at Circle, because of their equity stake in the firm, so they are more effective from a pricing standpoint than other large bank facilitators. Their clients know this and it breeds confidence in the firm as a safe place to funnel investment dollars into digital assets.”
Several media outlets have published OTC volumes ranging in the billions on a daily basis and the feedback amongst those ‘in the know’ regarding Goldman’s involvement would echo those numbers.
OTC trading has begun to significantly outpace exchange volumes as larger investors (whales) increasingly prefer to trade with a perceived air of invisibility, while avoiding pushing the markets one way or the other.
Speaking to a crypto focused firm in New York late last week they commented on the strength of their $BTC OTC operations and its growth over the past 90 days. Specifically, increased volume on the buy-side.
And it isn’t just UHNW individuals doing the buying. Shadow crypto trade desks at firms like State Street, Morgan Stanley, etc are buying $BTC in volume as well. They are simply stopping short of drafting press releases to tell the world about it.
As the tail of the bear market lengthens, smart money sees $BTC as an accumulation opportunity. Don’t be surprised, once the regulatory framework in the US is sufficiently clear if these firms begin to disclose the breadth and depth of their involvement in the crypto space.
It may surprise all of us.