Goldman Sachs will begin Bitcoin Futures trading soon...

Goldman Sachs has announced they will enter the cryptocurrency market, trading Bitcoin futures on behalf of clients within weeks. In a move that seems to be in response to client interest in Bitcoin investment, Goldman Sachs will offer a form of futures contract called a "non-deliverable forward".

Importantly, this means that the contracts will be cash-settled as opposed to being settled in Bitcoin itself. This means that Goldman Sachs is essentially enabling speculation based on market prices of Bitcoin without actually having any causal influence on the supply or demand of Bitcoin, other than the psychological effect a large volume of short or long bets may have on the actual market.

It is yet to be seen whether the introduction of futures actually had any real impact on the value of Bitcoin in the past. One might conclude that prices were negatively affected by previous futures being introduced by the CME and the CBOE, but it is entirely possible that this had little real effect on prices as there were many other mitigating circumstances when these contracts were first initiated.

If anything, a large trend to short or long Bitcoin may cause a bearish or bullish sentiment to spread to the actual market simply because of the psychological influence this might cause to wary traders. An entity such as Goldman Sachs and its large-scale investors stand to make considerable profit by playing both sides of the game, shorting Bitcoin, for example, and dumping actual Bitcoin prior to contracts expiring. Conversely, it could also be conceivably profitable to suppress Bitcoin prices, go long, and pump prices prior to settlement. This is an organisation that has the capacity to wield considerable funds to their advantage.

Until Bitcoin futures are settled in actual Bitcoin, futures are all just a speculation game that will be manipulated by those with larger assets. Over the course of time as Bitcoin liquidity improves by moving through the market, we may experience less of this direct manipulation, but for now, expect to see Goldman Sachs making as much money off of this any way they can. Would you really expect anything less?

It's quite likely that the wolf has been lurking in the hen-house for some time now. Goldman Sachs has probably already been accumulating Bitcoin during the recent lows in order to reap large profits. Having said that, their official entry into the market might bring more mainstream attention to Bitcoin and cryptocurrency, so in the long term, this event could be beneficial to the cryptocurrency movement, even though it may cause short term pain.

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