JPMorgan Chase adjusts Bitcoin target price to $130,000! Goldman Sachs will provide Bitcoin investment tools to its clients

Goldman Sachs to offer Bitcoin investment tools to its clients

Goldman Sachs Group will soon offer Bitcoin and other digital asset investment tools to clients of its private wealth management division. Mary Rich, the division's recently appointed global digital asset director, said in an interview: "Teams across the company are working closely together to provide a thoughtful and appropriate ecosystem for private wealth clients."

“Rich will ensure the firm is better positioned to meet client needs across digital asset classes and technologies,” Goldman Sachs said in a statement on Wednesday. “We believe in blockchain technology and we will continue to do so.”

Rich said Goldman Sachs plans to start offering digital asset investments in the second quarter, whether trading through physical bitcoin, derivatives or traditional investment vehicles, and such investment methods will be fully improved.

Wall Street banks have been avoiding cryptocurrencies. Although Bitcoin has been around for more than 11 years, there is actually very little you can buy with it, and its volatility is a major risk. Three years ago, Goldman Sachs hired a cryptocurrency trader to develop the digital asset market and familiarize company employees and clients with cryptocurrencies. Until February of this year, Goldman Sachs still did not consider Bitcoin as an asset class.

Investors largely stayed on the sidelines during Bitcoin's 2017 surge. Bitcoin has also been on a tear in the past few months, and it's attracting wealthy investors in a new way. Many have compared it to tulip mania, the world's first bubble. Buffett has called Bitcoin a "mirage," and JPMorgan Chase CEO Jamie Dimon has called Bitcoin a scam, a comment he later regretted.

This time, they joined many retail investors in buying Bitcoin. As of mid-March, retail investors bought more than 187,000 bitcoins this quarter, compared with about 205,000 in the previous quarter, according to JPMorgan Chase data. During this period, financial institutions bought about 173,000 bitcoins, but that was lower than the nearly 307,000 bitcoins in the fourth quarter of 2020.

Big banks are considering how clients could use Bitcoin to diversify their portfolios. JPMorgan Chase strategists recently touted Bitcoin as a way to hedge against large swings in traditional assets. Bank of New York Mellon also announced plans to hold, transfer and issue Bitcoin for clients.

BlackRock Fund bought Bitcoin futures in January this year

Asset management giant BlackRock Fund revealed on Wednesday that as of the end of January, one of its funds held some Bitcoin futures. In mid-February, BlackRock Chief Information Officer Rick Rieder told reporters in an interview that BlackRock has begun to get involved in Bitcoin.

According to the filing on March 31, the BlackRock Global Allocation fund held 37 units of CME Bitcoin futures. The documents show that these contracts expired on March 26, and the total notional amount of the contract expiration date was $6.1 million, an increase of about $360,000. Reed said: "I think that as technology and regulatory systems develop, people find that Bitcoin should be part of the portfolio, so this is why its price has risen."

A few months ago, two BlackRock funds, including the BlackRock Global Allocation Fund, said in regulatory filings that they may gain exposure to the crypto market through CME Bitcoin futures products.

The two filings were dated Jan. 20, and the CME bitcoin futures were supposedly purchased shortly thereafter. Since the filings only provide financials through Jan. 31, it’s unclear whether BlackRock funds will continue to hold exposure to CME bitcoin futures.

Bitcoin is about to hit a new high, and the options market has a bullish bias

Since late March, Bitcoin has slowly recovered, with bullish sentiment emerging on Bitcoin options on the options trading platform Deribit as Bitcoin is only about 4.6% away from its all-time high.

Genesis volatility, an options analysis platform, said that the option volatility skew is slowly rising, meaning that the demand or premium for call options is once again higher than that for put options, showing a bullish bias. Laevitas, a Swiss options analysis company, said that once the psychological resistance of $60,000 is broken, "fireworks will follow". Traders are preparing for a strong rebound in the short term through deep out-of-the-money call options such as those with an exercise price of $80,000.

Three countries issue new orders targeting crypto asset business

On April 1, according to foreign media reports, the UK financial regulator, the Financial Conduct Authority (FCA), issued a new policy statement on Wednesday. From now on, crypto companies will be included in a business category called "REP-CRIM", which means that crypto asset companies must now submit financial crime reports.

The REP-CRIM reports provide the FCA with information on a number of indicators to understand the potential money laundering risks of these firms based on their regulated activities so that they can be better supervised.

The policy statement recommends that other companies and crypto-asset businesses should be brought into the regulatory scope based on their business activities and potential money laundering risks. Currently, the number of companies that must file financial crime reports has increased from 2,500 to about 7,000.

The UK regulator initially announced the plan in August 2020, a move that would focus on data-centric regulation of fintech and financial crime reporting obligations regardless of a crypto company’s annual gross revenue.

For the FCA, crypto asset firms refer to cryptocurrency exchanges and custodial wallet providers. The introduction of REP-CRIM reporting requirements follows the regulator’s increased oversight of the virtual currency sector, which includes mandatory registration of digital asset firms.

The FCA has been overseeing AML compliance for crypto businesses in the UK since January 2020. A ban on retail derivatives trading also came into effect in January 2021.

Japan and South Korea will also crack down on money laundering using cryptocurrencies. The Japanese Financial Services Agency announced that it will begin implementing the Financial Action Task Force Data Transfer Rule (FATF Travel Rule) on the country's cryptocurrency industry in April next year to combat money laundering. The rule requires virtual asset service providers to share transaction data of senders and receivers. The Japanese Financial Services Agency asked the Japan Virtual and Crypto Asset Exchange Association (JVCEA) to advise its members to prepare for the implementation of this rule.

Separately, South Korea’s Financial Services Commission began implementing anti-money laundering safeguards to comply with FATF regulations on March 25. This led to the Korean branch of cryptocurrency trading platform OKEx deciding to cease operations, citing the difficulty the platform would have in overcoming the new regulatory hurdles.