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Goldman Sachs Is Setting Up a Cryptocurrency Trading Desk

bloomberg.com

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Re: Goldman Sachs Is Setting Up a Cryptocurrency Trading Desk

#51

Post by stuffedBelly »

nerdponx wrote: post #27
stuffedBelly wrote: post #14

Earlier quoted context omitted.

burst of ICO bubble likely won't take down the whole economy. BTC contracts are high return + extremely high risk, which are typical traits of junk bonds, meaning they won't be treated as investment-grade securities.

OK, except we've all heard that one before.

You have all heard it for sure. I am just laying out the fact that low-grade securities won't move the market as much as people thought they would. BTC is an exception on popularity given everyone knows about it, but it doesn't change the fact that BTC contracts will never be rated as A/AA/AAA given its ridiculous level of volatility.

Re: Goldman Sachs Is Setting Up a Cryptocurrency Trading Desk

#52

Post by workthrowaway27 »

AznHisoka wrote: post #47
frgtpsswrdlame wrote: post #43

Earlier quoted context omitted.

Well actually that's not what we advise but we're not GS either. >Best performing asset class over the last few years. Previous performance is not a predictor. >Even if it is a bubble, you might as well allocate a few %'s of your portfolio to it if you're wealthy If it's a bubble it's a terrible idea to allocate a few percentage points to it.

"If it's a bubble it's a terrible idea to allocate a few percentage points to it." Why? The word 'bubble' has negative connotations, but the flip side is the only opportunity of a great multiplier on your investment in a short time is during a bubble. Caveat of course, you can lose a lot of money, but that's why you allocate 1% of your portfolio so you can still survive.

Because when a bubble bursts money has just been moved around but there's no net increase in wealth. Expected value is close to zero.

Re: Goldman Sachs Is Setting Up a Cryptocurrency Trading Desk

#53

Post by junkscience2017 »

tootie wrote: post #29

Can someone explain this collective mania to me? This is all 100% pure speculative frenzy, right?

amateurs like Coinbase might speculate, but pros like GS use the Federal Reserve as their backstop

its one of those "heads I win, tails you lose" scenarios...GS will keep the profits but if things go south, their losses can just be taken out of your local school budget

Re: Goldman Sachs Is Setting Up a Cryptocurrency Trading Desk

#54

Post by fitchjo »

52-6F-62 wrote: post #37
headmelted wrote: post #26

Earlier quoted context omitted.

Mostly I think it's 1. A lot of people jump on guys like Jamie Dimon and Lloyd Blankfein for calling Bitcoin massively volatile / a bubble / whatever, like they hate cryptocurrencies. They don't care, and they aren't supposed to. Their business is to sell whatever the customer wants to buy, cheaper or easier than they can get it elsewhere - and right now the customer wants to buy Bitcoin. Who cares if the backside fa…

Don't forget Jamie Dimon's company is founding their own blockchain for transactions, Quorum. https://www.jpmorgan.com/global/Quorum

Finding a use for the underlying technology supporting bitcoin is very different than saying bitcoin as a fiat currency is worth the value at which it is currently trading.

Re: Goldman Sachs Is Setting Up a Cryptocurrency Trading Desk

#55

Post by charlesdm »

workthrowaway27 wrote: post #52
AznHisoka wrote: post #47

Earlier quoted context omitted.

"If it's a bubble it's a terrible idea to allocate a few percentage points to it." Why? The word 'bubble' has negative connotations, but the flip side is the only opportunity of a great multiplier on your investment in a short time is during a bubble. Caveat of course, you can lose a lot of money, but that's why you allocate 1% of your portfolio so you can still survive.

Because when a bubble bursts money has just been moved around but there's no net increase in wealth. Expected value is close to zero.

Which is why you need to have a clear exit point, not keep your money in forever. Fortunes were made (but also lost) during the dot-com bubble.

Re: Goldman Sachs Is Setting Up a Cryptocurrency Trading Desk

#56

Post by jonpo »

aviv wrote: post #11

So much for the promised currency / store-of-value that can't be manipulated by banks / governments.

"Chancellor on brink of second bailout"...The animals, watching through the window, realize with a start that, as they look around the room of the farmhouse, they can no longer distinguish which of the cardplayers are pigs and which are human beings.

Re: Goldman Sachs Is Setting Up a Cryptocurrency Trading Desk

#57

Post by workthrowaway27 »

kingkawn wrote: post #19
reefoctopus wrote: post #5

Earlier quoted context omitted.

Why do you think it would have any effect? It’s still a comparatively tiny market.

It is small, but has an indeterminate reach throughout the international economy. Nobody knows where the exposures to its collapse would be. A market panic could ensue from such a collapse, followed by other vulnerabilities becoming magnified in importance to the minds of investors. This of course is a guess, and it could well have little impact. But it seems that the risk is larger than the size of this market would…

It will have almost no impact at this point. It's not highly levered or used as collateral in the financial industry. There's no coupling between BTC and the rest of the financial industry.

Re: Goldman Sachs Is Setting Up a Cryptocurrency Trading Desk

#58

Post by dahdum »

kregasaurusrex wrote: post #20

I'm sort of surprised there's going to be a regulated secondary market for this, where the newest version of the GOP Tax plan will place a fee on this form of arbitrage[1]. Then again, I did learn today that a hot wallet I had on a crypto-trading website had folded and didn't send me any notice of shutdown; along with the time period of filing a claim having been long passed. Since there's a lot of theft and lack of…

It's not a new fee, IRS gave guidance on this already in 2014. The bill just updates the language more specifically.

Believing crypto-crypto trades would be like-kind was always pretty fanciful thinking.

Re: Goldman Sachs Is Setting Up a Cryptocurrency Trading Desk

#59

Post by AnimalMuppet »

charlesdm wrote: post #55
workthrowaway27 wrote: post #52

Earlier quoted context omitted.

Because when a bubble bursts money has just been moved around but there's no net increase in wealth. Expected value is close to zero.

Which is why you need to have a clear exit point, not keep your money in forever. Fortunes were made (but also lost) during the dot-com bubble.

Yeah, but now you're trying to time the market. That's... a less than optimal strategy.

Re: Goldman Sachs Is Setting Up a Cryptocurrency Trading Desk

#60

Post by frgtpsswrdlame »

AznHisoka wrote: post #47
frgtpsswrdlame wrote: post #43

Earlier quoted context omitted.

Well actually that's not what we advise but we're not GS either. >Best performing asset class over the last few years. Previous performance is not a predictor. >Even if it is a bubble, you might as well allocate a few %'s of your portfolio to it if you're wealthy If it's a bubble it's a terrible idea to allocate a few percentage points to it.

"If it's a bubble it's a terrible idea to allocate a few percentage points to it." Why? The word 'bubble' has negative connotations, but the flip side is the only opportunity of a great multiplier on your investment in a short time is during a bubble. Caveat of course, you can lose a lot of money, but that's why you allocate 1% of your portfolio so you can still survive.

Well part of that is how we define bubble, since it can only be post hoc, then by definition a bubble is bad since you're going to lose your money when it pops.

But basically it's because we don't try to time the market in that sort of way. Bubbles are great if you can sell right when you need to and (1) Bitcoin is fucking godawful at that and (2) we don't want to try and do that. Better to invest long term and ride an economic wave.

Timing in the sense of "we think European stock are going to do well so we'd likely to slightly increase the allocation across our portfolios" is alright but timing in the sense of "we think we can buy a new type of highly volatile asset with no underlying fundamentals and which doesn't fit neatly into any of our extant asset classes and sell it before it goes bad even though we can't do the same thing with regular old GE stock" is really bad.

Think of it this way, would you ever put 2% of your IRA on a roll of the craps wheel? No, because that's not what that account is for.

EDIT: Maybe a better example would be like buying TSLA options. You wouldn't do that in a portfolio because it's volatility for basically no reason.

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