The Curious Case of Goldman Sachs and Crypto
Goldman Sachs has a reputation for diving into markets like a kid into a pool—sometimes without checking how deep it is first. Recently, trader and CEO Peter Brandt raised eyebrows by hinting that whenever the prestigious bank enters a market, it’s time for cautious wallets to be on high alert. Unfortunately, history hasn’t been too kind to these bold forays into cryptocurrency.
A Blast from the Past
Time travel back to December 21, 2017: The financial world buzzed with news that Goldman Sachs was planning on establishing a cryptocurrency trading desk. Add a sprinkle of security concerns, and voilà! Rumors started flying faster than you can say “Bitcoin.” But lo and behold, after months of audacious speculation, the renowned bank decided to fold its poker hand.
Back Then vs. Now: What’s the Difference?
Take a moment to reflect on the crypto frenzy of late 2017. Bitcoin trading volumes surged from around $2 billion a day to a staggering $14.6 billion! Picture people selling their Binance accounts like hotcakes, just to join the trading party. But fast forward to now, and the current enthusiasm seems more like a quiet gathering of institutional investors rather than a rave.
Volume: The Silent Market Indicator
When Peter Brandt cryptically cautions about market participation, he’s onto something. The current trading volumes boast a daily average of about $66 billion, which sounds impressive—until you realize it’s been hanging around like that friend who never leaves your couch. That’s relatively flat for several weeks, indicating cautious rather than reckless trading behavior.
The Role of Leverage in Trading
Deciphering the mood of the market is as important as understanding its mechanics. Back in 2017, traders were paying through the nose to maintain their positions; the funding rates for perpetual futures soared up to a jaw-dropping 40% per week. It was like a rollercoaster ride fueled by retail fervor. Today, however, the 4% funding rate we see now is like comparing a bicycle ride to a Formula 1 race. Much less thrilling and a lot less risky.
Market Dynamics: Then and Now
The market landscape of 2017 shifted dramatically with the launch of the CME and CBOE futures contracts. It turned out to be the sort of euphoric peak the bears were licking their chops over. Do we see any signs of similar monumental shifts today, especially with whispers of Goldman Sachs re-entering? A resounding ‘no,’ my friend.
Concluding Thoughts: Do We Really Need to Worry?
Ultimately, Brandt’s assertion remains more of a nostalgic nod to the ghost of crypto past rather than a present-day alarm bell. While his previous predictions have some merit, evidence supporting recent downturn theories based on a single incident from years ago leaves much to be desired. So before you scramble to protect your investments, maybe take a step back, sip that coffee, and remember: the past is often full of false prophets.
