Wall Street giant Goldman Sachs Group is planning to launch over-the-counter (OTC) Ether option trading “in due course” as client demand for options tied to the second biggest crypto is on the rise.
As the Goldman Sachs’ team shared on April 5th, a growing number of the investment bank’s clients are shifting to Ether, which has become “more of an investable asset class” than market leader Bitcoin as the Ethereum dev team prepares to complete the network’s migration to the Proof of Stake consensus mechanism this summer.
Help to Predict Price Direction
As financial derivatives, options give traders the right, but not the obligation, to buy or sell assets at a predetermined price within a specific period of time. By buying an option, investors can postpone the purchase or sale of an asset. At the same time, they can make a substantial profit without investing a large amount of money.
Due to their higher accessibility and array of features, options have recently become one of the most popular forms of investment, including among retail traders. Last year, for instance, daily options trading amounts increased by 35% when compared to previous years.
The thing is, options data can be used to predict the further direction of the whole market or of a specific asset.
More Untrackable Movements
As one of the biggest investment banks worldwide, Goldman Sachs represents more than 3 million customers in total. Each of these clients must possess at least $10 million in investable assets in order to open an account.
This in itself suggests that capital inflows into Ethereum options trades might as well be significant.
However, OTC trades change a lot in this context. Over-the-counter trades are executed privately and happen outside of exchanges. In other words, they act as direct trades between the two parties, without anyone else knowing about or tracking them.
In light of this, the chances that the volumes of ETH option trades will be reflected on crypto exchanges and data tracking platforms are considerably low. This implies that whales will be moving assets around unnoticed.
Goldman Sachs offered its first OTC Bitcoin options trading service last month, and currently supports access to crypto ETPs on Canadian and European exchanges. Nevertheless, the bank still does not support cryptocurrency spot trading.