Goldman Sachs Predicts Gradual Impact of Spot Bitcoin ETFs on BTC

Leading global investment bank, Goldman Sachs, has shared insights on the future of Bitcoin and the impact of potential spot bitcoin ETFs. Mathew McDermott, the head of Goldman’s digital asset unit, in a recent interview with Reuters, downplayed the possibility of a rapid increase in Bitcoin prices following the approval of these ETFs by the U.S. Securities and Exchange Commission (SEC). He believes that while the approval might not lead to an immediate spike in liquidity and price, it could draw new institutional investors.

McDermott stated, “This ability to actually transact a product that people are familiar with and can provide scale, I think is very positive.”

Currently, Goldman Sachs offers cryptocurrency derivatives trading for its institutional clients. This service is part of the bank’s FX desk, though they don’t trade the underlying asset. McDermott noted a rise in client interest in crypto derivatives, spurred by the anticipation of the SEC approving spot bitcoin ETFs. Despite acknowledging that the crypto market is relatively small, he observed increased excitement and interest in it.

Beyond cryptocurrencies, McDermott’s focus extends to the broader spectrum of digital assets, including the development of blockchain-based tokens for traditional assets like bonds. He sees a significant and growing interest in digital assets and believes that blockchain technology can improve operational and settlement efficiencies, thereby reducing risks in financial markets.

“Probably within the next one to two years you’ll see a big significant uptick in the quantum trading on-chain, probably three to five years to really see these marketplaces at scale.”

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Looking ahead, McDermott anticipates a substantial increase in on-chain trading in the next one to two years and expects these marketplaces to scale up in three to five years. However, he is cautious about the possibility of blockchain completely replacing traditional financial markets in the near future.