Goldman Sachs released a report last week in which they argued that 2023 would be the year that cryptocurrency markets evolved and were adopted by institutions:
- “The institutionalization of the market was most evident in the derivatives market,” with the growth of trading interest and volume on the Chicago Mercantile Exchange (CME).
- “CME has seen a steady increase in Bitcoin (BTC) and Ether (ETH) futures and options trading, becoming the leading BTC futures exchange by open interest in the fourth quarter.”
According to GS, this is a significant change from before, when cryptocurrency markets were dominated by unregulated trading venues and retail investor activity.
In terms of price activity, GS noted a flat performance in the first nine months of 2023, but an increase in activity and price movements driven by institutional investors preparing for possible spot BTC ETF approval. Inflows into existing exchange-traded products (ETPs) and futures ETFs were notable.
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I think GS also missed this as a major influence that was bubbling in the background from around the middle of the year:
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