A Great Tailwind for Bitcoin, Ether, and Crypto: A Gargantuan Amount of Money Is Wanting In
It is one of the largest groups of players, which involves boomers with a huge sum of money who haven’t joined crypto yet and are now showing “massive” interest.
Banking giant Goldman Sachs’ brokerage division is now clearing and settling cryptocurrency exchange-traded products (ETPs) for some of its European hedge fund clients.
These services are currently offered to a limited number of clients with plans to roll them out to a border customer base.
Back in March, Goldman Sachs restarted its crypto desk amidst the increasing interest from institutions in bitcoin. At the time, the bank said it was looking at ways to cater to a surge in demand to own and invest in the leading cryptocurrency.
Rival banks JPMorgan Chase and Morgan Stanley have also given their clients, particularly wealthy ones, access to crypto funds.
Just this week, as reported, JPMorgan gave its financial advisors the green light to give all of its retail wealth management clients access to four cryptocurrency funds that include Grayscale’s four products that cover Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH), and Ethereum Classic (ETC), along with Osprey's Bitcoin trust.
“This is bullish for the sole fact that banks offering these products removes friction for large clients,” said SplitCapital.
It then points out that the Private Wealth Management (PWM) division for most banks involves wealthy clients, which generally ranges between $1-$50 million. And the overwhelming majority of the clientele are boomers, and banks offer them bespoke services for their money and abstract away the investing game.
“Even though generally unsophisticated, this group of investors make up a gargantuan sum of money: $1.2 trillion+ (2021), 54% of which are based in the US. And the AUM is only increasing as banks are adding higher minimum deposits.”
According to a survey by Goldman Sachs, nearly half of family offices that oversee the wealth of rich families also want to get into crypto, while 15% are already in it.
45% of the 150 family offices surveyed across the world said they are looking to enter the market because of “higher inflation, prolonged low rates, and other macroeconomic developments following a year of unprecedented global monetary and fiscal stimulus.”
In March, Goldman Sachs said it was close to offering its private wealth clients the opportunity to invest in bitcoin-tied investment vehicles.
These services are 100% client-facing, and banks only roll out products that their clients want. Given that the banks are shipping them at a time when the crypto industry is facing regulatory scrutiny, this could only mean that “interest is still massive.”
Still, banks and traditional investors are slow-moving, and these things take a lot of time. Overall, in the long run, it is “very positive, and we'll likely see big spot flows if demand remains this high.”
“I think this is probably the largest group of players that still haven't joined (short of MFs + ETFs). It's a great tailwind and hopefully only grows as legitimacy increases.”