Goldman Sachs bets big on crypto with $718M in Bitcoin ETFs

Goldman Sachs, a leading global investment bank, has significantly increased its investments in Bitcoin exchange-traded funds (ETFs).

Once a critic of Bitcoin, the bank now holds a massive $718 million across several Bitcoin ETFs, according to a filing with the United States Securities and Exchange Commission (SEC) on 14 November.

This latest disclosure shows how much Goldman Sachs has shifted its approach to cryptocurrency as Bitcoin continues to make waves in global financial markets.

The filing revealed that Goldman Sachs has poured $461 million into BlackRock’s iShares Bitcoin Trust ETF (IBIT), its largest single Bitcoin ETF investment. 

In total, the bank has increased its Bitcoin ETF holdings by $300 million since the previous quarter, a 71% jump.

Goldman Sachs entered the Bitcoin ETF market earlier this year, starting with a $418 million investment in the second quarter. 

In addition to its stake in BlackRock’s IBIT, the bank has invested $96 million in Fidelity’s Wise Origin Bitcoin Fund (FBTC), another major player in the Bitcoin ETF market. The bank also holds $72 million in the Grayscale Bitcoin Trust ETF (GBTC) and $60 million in the Invesco Galaxy Bitcoin ETF (BTCO).

Smaller investments include $22.5 million in the Bitwise Bitcoin ETF (BITB), a $3 million stake in the ARK 21Shares Bitcoin ETF (ARKB), and $4 million in the Grayscale Bitcoin Mini Trust ETF (BTC). Its smallest disclosed investment is $800,000 in the WisdomTree Bitcoin Fund (BTCW).

Goldman Sachs’ interest isn’t limited to Bitcoin. The bank also revealed investments in Ethereum-focused ETFs, totalling $22 million. This includes $22.6 million in the Grayscale Ethereum Mini Trust ETF (ETH) and $2.6 million in Fidelity’s Ethereum Fund (FETH).

A change in tone

Goldman Sachs’ growing investments in cryptocurrency are surprising given the bank’s past stance. In 2020, Goldman Sachs dismissed Bitcoin, claiming it was “not an asset class” and “not suitable for investment.”

Even after launching a limited Bitcoin derivatives trading desk in 2021, scepticism lingered. Earlier this year, the bank’s Chief Investment Officer for Private Wealth Management, Sharmin Mossavar-Rahmani, remained critical of Bitcoin. 

In an interview with The Wall Street Journal, she argued, “We do not think it is an investment asset class”, comparing Bitcoin’s popularity to the tulip bubble of the 1600s.

Mossavar-Rahmani also noted that most of Goldman Sachs’ clients had little interest in cryptocurrency exposure, despite the ongoing bull market. “We’re not believers in crypto”, she added.

This sharp increase in the bank’s Bitcoin investments suggests a shift, possibly influenced by the growing institutional acceptance of cryptocurrency.

Bitcoin breaks records

Goldman Sachs’ increased involvement comes during a period of major gains for Bitcoin. This month, Bitcoin hit an all-time high of $93,434, following a 32% price surge over 30 days. 

This rally was partly driven by market optimism after Donald Trump’s victory in the US presidential election.

At the time of writing, Bitcoin’s price has corrected slightly to an average of $89,488. However, its strong performance has captured the attention of investors worldwide.

Bitcoin ETFs have been a major factor in this rally. Over the past six days, Bitcoin ETFs received $4.7 billion in net inflows, bringing the year’s total to $28.2 billion. 

BlackRock’s IBIT has been a standout performer, recording $5 billion in trading volume and surpassing several traditional stocks and ETFs with $13 billion traded in just three days.

Despite this surge, Bitcoin ETFs saw a notable reversal on 14 November, with net outflows of $400.7 million. Fidelity’s Bitcoin ETF led the outflows, losing $179.2 million. 

Other major ETFs also saw withdrawals, including $161.7 million from ARK & 21Shares Bitcoin ETF, $113.9 million from Bitwise Bitcoin ETF, and $74.9 million from the Grayscale Bitcoin Trust ETF.

Interestingly, not all funds suffered. BlackRock’s IBIT bucked the trend, gaining $126.5 million in net inflows. VanEck’s HODL ETF also saw a small gain of $2.5 million.