With about $1.3 billion of BlackRock’s ETF shares and $300 million of Fidelity’s, the second-largest investment bank in the world continues to add Bitcoin to its portfolio. As of the revealed data till December 31st, Goldman Sachs has accumulated around $2 billion in BTC and Ethereum ETFs. The data was disclosed through the recent U.S. Securities and Exchange Commission (SEC) 13F filings.
While the buzz around Goldman Sachs’ accumulation is giving optimistic vibes, there are opinions that it is just an overhype rather than a strategic move. Various experts point out that we can expect similar hype in the upcoming fourth-quarter 13F disclosures where names like JPMorgan, Morgan Stanley, and other large wealth-management firms will be trending.
Is Goldman Sachs’ Move Strategic or Just Hype?
It is clear in the Securities and Exchange Commission (SEC) filing that a large number of ETF options are put options rather than sell options. This will not give hodler the right to sell the asset at a predetermined price. According to Coindesk analyst James Van Straten, the position of Goldman Sachs is not a net long position. This seems like an overhyped cash-and-carry trade that is usually practiced to balance the volatility risks.
While Bitcoin maximalists argue that BTC doesn’t require any marketing or hype to survive the market, is it obvious that knowingly or unknowingly, ETFs have become a part of the marketing strategies. The news regarding Bitcoin ETFs is speculated over mainstream and alternative media primarily to create hype so that small-cap traders will flock to the asset.
Will ETF Explosion Enhance the Broader Financial System?
Blockchain experts admit the arrival of unforeseen new risks with the combination of the traditional financial system and the cryptocurrency economy. While it allows traditional traders to gain easy access to crypto, the volatile nature of crypto might affect other parts of the broader economy. There are previous examples where the less liquid and highly leveraged ETFs have experienced extreme market stress.
Apart from the volatility risks, ETFs demand high management fees. The limited trading hours will not allow the traders to buy & sell assets, unlike the 24-hour Centralized Finance (CEX) and DEX markets. Also, the lack of direct ownership is contrary to the foundational aspects of blockchain itself.
Final Thoughts: Where Bitcoin is Headed?
While there is optimistic news in the media like the Goldman Sachs’ ETF move, the chances of Bitcoin going down are so high. The crypto ETFs have been a recurring aspect in the news to pump the cryptocurrency market for a while. A portion of investors are fed up with the ETF overload news in the web3 realm. Also, the trendy pro-crypto narrative of the Trump administration is slowly diminishing.
BTC will possibly witness a short squeeze where the short-sellers will be forced to buy back the asset, followed by a sudden downtrend. According to expert predictions, BTC will likely move towards the $85,000 support level. At the time of writing, it is trading for $96,215, with a 2.45% decrease in cap this week.
