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Goldman Sachs Says Bitcoin’s Options Market Could Spur new Institutional Interest

By:
Oluwapelumi Adejumo
Updated: Dec 3, 2021, 14:13 GMT+00:00

Goldman Sachs has stated that a developed Bitcoin Options market could lead to a new wave of institutional interest in the asset.

Goldman Sach Exec Says Bitcoin’s Options Market Could Spur Institutional Interest

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The leading global investment banking, Goldman Sachs, has noted that developing crypto options will be a landmark achievement for the crypto space especially as the sector continues to enjoy an influx of traditional financial investors.

Bitcoin Needs a Developed Options Market

This statement was made by Goldman Sachs’ global head of crypto trading, Andrei Kazantsev, during a CoinDesk-hosted panel discussion where he stated that there is a growing demand among investors for crypto derivative products.

According to him, “We are seeing a lot of demand for more derivative-type hedging. The next big step that we are envisioning is the development of options markets.”

Judging by available data, one cannot but agree with him that demand for a Bitcoin options market is growing exponentially. Per available data from Skew, a crypto analytics site that tracks the derivatives market, the total value of outstanding contracts in Bitcoin options is above $12 billion. To put this in perspective, the figure rarely eclipsed $2 billion throughout last year.

Kazantsev explained further that where “there might be equity funds that have an exposure to a stock that has underlying bitcoin holdings” traders looking to hedge that exposure might be interested in trading futures instead of having to rebalance their portfolios. That is where options trading comes in as it allows them to hedge these kinds of investments for the long term. 

Options trading is often called “derivatives.” Investors tend to use this trading option to protect themselves against any existing risk or further use this trading tool to have more exposure to the market.

Bitcoin’s Performance in the Last 24 Hours

According to available data from CoinMarketCap, Bitcoin’s price has increased by around 0.3% within the last 24 hours allowing it to trade as high as $57,349 while its lowest price within the same period is at $56,102. The trading volume of the flagship digital asset has dropped by close to 10% within the last 24 hours too.  

Since touching a new ATH in early November, the value of the digital asset has plummeted back to the $50k levels, allowing sceptics to point at its inherent volatile nature. As of press time, it is exchanging hands for $56,944.

About the Author

Oluwapelumi is a firm believer in the transformative power power Bitcoin and Blockchain industry holds. He is interested in sharing knowledge and ideas about how the industry could play a pivotal role in the emerging financial system. When he is not writing, he is looking to meet new people and trying out new things.

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