Goldman Sachs launches derivative product on Ether
Goldman Sachs launches derivative product on Ether
Ethereum

Goldman Sachs launches derivative product on Ether

By Vincenzo Cacioppoli - 14 Jun 2022

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After announcing a few weeks ago its intention to offer its wealthiest clients derivative instruments also in cryptocurrencies, Goldman Sachs would now be ready to launch the first of these products, with Ethereum as the underlying. The product should be the first in a series of investment derivatives.

Specifically, it is Ethereum non-deliverable forward, a derivative that pays based on the price of the token on the main blockchain and offers institutional investors indirect exposure to the cryptocurrency.

London-based financial services company Marex Financial was Goldman’s counterparty.

It is quite remarkable that an investment bank decides to bet on cryptocurrencies, precisely in one of the most difficult moments for the market which, after the collapse of the Terra ecosystem and its stablecoin UST, still seems to be at the mercy of uncertainty and pessimism, with Bitcoin dropping below $23,000 and Ethereum below $1200.

Then again, the attitude of almost all investment banks towards cryptocurrencies and Bitcoin has changed dramatically over the past two years. While up until 2020 all the major investment banks considered cryptocurrencies as some sort of scam or an instrument without any intrinsic value, they gradually began to change their opinion and very optimistic forecasts on the price of Bitcoin began to circulate (such as the one of $135,000 by 2023 made six months ago by J.P. Morgan, but also the one made by Goldman Sachs itself that predicted the possible exceeding of $100,000).

But the idea of proposing derivative instruments with cryptocurrency as underlying assets by the investment bank Goldman, is an idea that goes back about a year. And Ethereum has always been the preferred currency over Bitcoin. According to the bank’s experts, ETH would in fact have much more potential than Bitcoin, due to its many possibilities of use. According to a forecast by the bank’s analysts made in November 2021, ETH could exceed $8000 by the end of 2022.

On the other hand, J.P. Morgan had stated a few months ago that Ethereum futures were more popular than Bitcoin futures, according to its own analysis. Another tangible sign that in the eyes of investors, or a large part of them, from a long-term investment perspective, the Ethereum coin has become more attractive than Bitcoin itself.

At the beginning of May, Goldman Sachs again concluded with the exchange Coinbase the first loan secured entirely by Bitcoin as collateral.

“Coinbase’s work with Goldman is a first step in the recognition of crypto as collateral which deepens the bridge between the fiat and crypto economies”.

Brett Tejpaul, head of Coinbase Institutional, told Bloomberg at the time.

Vincenzo Cacioppoli

Vincenzo was born in Genova but lived most of his life in Milan. He has a degree in political science. He is a journalist, blogger, writer, and marketing and digital advertising expert. After a long experience in traditional marketing, he started working with the web and digital advertising in 2011, creating a company called Le enfants. Passionate about the web and innovation, in 2018 he started exploring the topics related to blockchain technology and cryptocurrencies. Independent cryptocurrency trader since March 2018, he now collaborates with companies in the sector as a content marketing specialist. In his blog. mediateccando.blogspot.com, he has long been primarily focused on blockchain, which he considers to be the greatest technological innovation after the Internet. His first book about blockchain and fintech is scheduled for release in November.

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