The Next Winner of the Bitcoin Trend….Goldman Sachs?

I am long Goldman Sachs.

I know I know…

Hear me out on this idea…

Goldman Sachs has been basing for a long time now. The stock continues to look prime for a big breakout:

The catalyst for a leg higher may actually be Bitcoin.

On Sunday, bitcoin futures becomes a thing:

CME Group, the largest derivatives exchange in the world, as well as one of the oldest, will launch bitcoin futures trading on Dec. 18th, while CBOE Global Markets, which owns the Chicago Board Options Exchange (the largest U.S. options exchange) and BATS Global Markets, plans to beat CME to the punch by opening its own trading on Dec. 10th.

As futures markets develop, the banks will start to make the profits that only the bitcoin holders had been making.

Both the CME and the CBOE futures settle in cash, not in actual bitcoin. Just imagine the legal and logistical hassle if two reputable and regulated exchanges had to set up custodial wallets, with all the security that would entail.

So, it’s likely that the bitcoin futures market will end up being even larger than the actual bitcoin market.

Side effects

That’s important. Why? Because institutional investors will like that. Size and liquidity make fund managers feel less stressed than usual.

The bitcoin market seems to be excited at all the institutional money that will come pouring into bitcoin as a result of futures trading. That’s the part I don’t understand.

It’s true that the possibility of getting exposure to this mysterious asset that is producing outstanding returns on a regulated and liquid exchange will no doubt entice serious money to take a bitcoin punt. Many funds that are by charter prohibited from dealing in “alternative assets” on unregulated exchanges will now be able to participate.

And the opportunity to leverage positions (get even more exposure than the money you’re putting in would normally warrant) to magnify the already outrageous returns will almost certainly attract funds that need the extra edge.

But here’s the thing: the money will not be pouring into the bitcoin market. It will be buying synthetic derivatives that don’t directly impact bitcoin at all.

In english…Goldman Sachs and their cronies have their hands in your Bitcoin wallets.

The thrill of endless price rises for Bitcoin might be gone for the time being.

The next few weeks should be interesting.

I would not be surprised to see the home gamers push Ethereum through the roof in protest!


Also published on Medium.