Galaxy Digital Holdings Ltd. will serve as a liquidity provider on Bitcoin futures for Goldman Sachs Group Inc. as the securities firm re-enters the cryptocurrency markets.
The digital-asset firm started by billionaire investor Michael Novogratz, a former Goldman partner, will provide futures block liquidity on CME Group Inc. for the Bitcoin cash-settled products, according to a statement. Liquidity providers typically make markets by agreeing to buy and sell assets at certain prices.
Goldman is restarting its crypto trading desk to help clients such as hedge funds deal in publicly traded futures tied to Bitcoin. Earlier this week, Goldman said it plans to offer options and futures trading in Ether, the second largest cryptocurrency after Bitcoin.
“This is the first step in what will be a long journey together as they grow in crypto and as we expand in more traditional space,” Jason Urban, New York-based Galaxy’s global head of trading, said in an interview.
Various Galaxy businesses have been talking with a number of other traditional banks as well, Urban said.
“It could be a very large business,” Urban said. “As more institutions feel comfortable transacting in crypto, Galaxy will be a liquidity provider for them.”
Despite recent market volatility, with Bitcoin still down about 40% since an all-time-high in mid-April, Galaxy is seeing as many inbound calls, he said.
Total crypto derivatives volume spiked as investors reacted to higher volatility, according to researcher CryptoCompare. The derivatives market now represents 53.3% of the total crypto market in May, up from 50.2% in April,” CryptoCompare said.
“Part of what you know going in is that crypto is an extremely volatile asset,” Urban said. “Oil is an extremely volatile asset. People are aware that hey, this is a volatile asset, but in the long term this is the right asset.”
Galaxy shares are currently listed in Canada, though the company has said it is looking to list in the U.S. this year.