Goldman Sachs Opens Crypto Trading Desk. What’re You Missing?

“What does Goldman Sachs know that I don’t know?”

If you’re a serious trader and don’t ask yourself that—whether it’s in a stock or options trade or, as is this case, with crypto—then you are missing out.

Of course, in this hypothetical, “Goldman” can be short-hand for all of Wall Street. But, as you may have guessed, it also means the literal institution of Goldman Sachs.

What prompted the latest installation of “What does Goldman know” is news that the iconic Wall Street firm is opening a cryptocurrency trading desk. (Headline not to be confused with the one where a Goldman Sachs managing director apparently quit his job this month after making so much money in Dogecoin.)

According to CNBC, the move comes after four years of contemplation about taking cryptocurrency more seriously:

Under CEO David Solomon, Goldman has said it is seeking to broaden its market presence by “selectively onboarding” crypto trading institutions to expand offerings. The firm also said it launched a new software platform this week that provides the latest cryptocurrency prices and news to clients.

Banks, including Goldman and rival Morgan Stanley, had announced plans to offer bitcoin investments to rich clients in their wealth management divisions but have mostly stayed away from the volatile asset in their Wall Street trading operations. Traders at firms including JPMorgan Chase have been asking managers when they could begin handling bitcoin, CNBC has reported.

So what changed?

In short: The institutionalization of Bitcoin and crypto trading. From Paul Tudor Jones’ endorsement to Tesla putting Bitcoin on its balance sheet to the Coinbase IPO, Wall Street is capitalizing on the boom in crypto. So on one level, the move is a natural progression. On another, it should be a shot across the bow to anyone who is not taking crypto seriously. That doesn’t mean that you need to run out and invest 90% of your liquid net worth in Bitcoin and Etherium like Raoul Pal did. But it means that you should start thinking about crypto as a legitimate asset class.

When you do, keep the following three things in mind:

1. It doesn’t have to be all or nothing. You don’t have to (and shouldn’t) YOLO Dogecoin or other alt coins to have an allocation to the crypto space. Thinking about Dogecoin as representative of the crypto space is like confusing out-of-the-money GameStop calls for legitimate options trading strategies. Vol adjusted, a 1-2% allocation in crypto space can be a significant alpha contributor to a classic portfolio. In short, your returns are uncapped, but your losses would be limited to 1-2%. What’s not to like?
2. HODL is not a strategy. You don’t have to put your money in crypto and then wait for it to go up 100x or fall to nothing. You can trade around it. In fact, with Wall Street coming more into the crypto space, we expect that it will actually legitimize it as a trading opportunity. That means less volatility, more technical-based moves, and quantifiable support and resistance levels. In fact, you should have stop losses. You should have profit targets. You should trade it.
3. You’re not too late. It’d be easy to look at Bitcoin price increase from less than $1 to $50,000+ and think all the money has been made. Or to look at Etherium, up nearly 2,000% in the past year, and think the same.

Interested in learning more about crypto trading? Get the first month for just $1 at marketrebellion.com/trycrypto.