Goldman Sachs To Offer Ethereum Fund by Galaxy Digital to Clients

Key Insights:

  • Goldman Sachs is set to offer clients access to an Ethereum fund issued by Galaxy Digital.
  • This is not the first time that Galaxy and Goldman are partnering.
  • Goldman Sachs’ employees are showing increasing interest in crypto.

Financial services giant Goldman Sachs is offering clients access to an Ethereum (ETH) fund issued by Galaxy Digital, according to regulatory documents filed with the US Securities and Exchange Commission (SEC).

Spot Exposure to Ethereum

Clients of Goldman Sachs looking forward to Spot exposure to Ethereum, have been offered space in Galaxy’s ETH Fund. Galaxy Investments disclosed this strategy in a filing on Tuesday, which listed Goldman as a recipient of introduction fees for referring clients to the fund.

According to the amended Form D filing, ‘Goldman Sachs & Co. LLC will receive an introduction fee’ for clients it brings to the ‘Galaxy Institutional Ethereum Fund.’

Galaxy Digital Holdings Ltd is a US-based crypto-focused financial service provider founded by Mike Novogratz. The firm had $2.8 billion assets under management at the end of Q4 2021.

According to the filings, the Galaxy fund has managed to sell over $50 million to 28 clients, with a minimum investment of $250,000.

However, for now, it isn’t clear if Goldman had directed any investment since the investment bank was not involved when Galaxy Digital launched the fund.

Additionally, independent wealth management firm CAIS Capital was also listed on the filing as a recipient of ‘placement fees’ for referring its clients to Galaxy’s ETH Fund. CAIS is separately involved in a different Galaxy-backed Ethereum fund whose filing also came out on the same day.

However, Goldman’s introduction fee and CAIS’s placement fee remain undisclosed.

Not the First Partnership

The recent partnership is not Goldman Sachs and Galaxy Digital’s first partnership. In June 2021, Goldman began offering Bitcoin (BTC) futures trading via CME Group Bitcoin Futures, with Galaxy Digital providing liquidity.

Notably, Goldman’s employees have shown interest in the evolving crypto space. On February 25, Roger Bartlett announced his exit from the traditional financial firm and joined crypto exchange Coinbase instead.

How Supply Issues could Influence SP500?

At the same time, many businesses continue to announce plans for further price increases, with most facing higher cost pressures. It will be interesting to see how or when the U.S. consumer starts to pull back.

Upcoming price increases

UPS yesterday was the latest to announce upcoming price increases, joining companies like Kimberley-Clark, Procter & Gamble, NestlĂ©, and Chipotle, to name just a few that are attempting to offset higher input costs. These moves reinforce the bears argument that inflation will prove to be longer-lasting than the Federal Reserve’s stance that the wave of higher prices is only “transitory.”

Judging from regional Federal Reserve Manufacturing Surveys that have been updated so far, challenges related to supply chain dislocations and labor shortages continue to contribute to the inflationary environment. Meaning manufactures are still struggling to expand output amid raw material shortages, higher input costs, transportation bottlenecks, and a lack of qualified workers. There have been minor improvements with the pace of cost increases easing a bit and respondent outlooks turning more positive.

It will take more than one month of slightly better data for investors to believe the worst of the supply chain mess is behind us, though.

Data to watch today

Economic data today includes advanced reads on Retail and Wholesale Inventories for October. Bulls are hoping inventories have managed to climb from depressed levels brought on by supply chain challenges, especially as we head into the holiday shopping season. Remember, if companies don’t have the products to sell it will be tough to meet earnings and growth forecasts.

Durable Goods Orders for September is also due today. Oil traders today are anxious to see the Energy Information Administration’s weekly oil inventory report after both Brent and WTI oil futures yesterday closed at their highest levels since 2014 when oil was trading close to $100 a barrel.

Investors this morning will also be digesting the Bank of Canada’s latest policy decision. Insiders are expecting the central bank to raise its inflation forecast and further cut its bond purchases. Another reduction will mark the fourth time in the past year that the Bank of Canada has “tapered” its asset purchases, something most other central banks have not yet begun. The Bank of Canada could also announce when it intends to begin interest rate hikes, with some analysts anticipating liftoff as soon as March due to rising inflation.

Such a move could increase fears that other global central banks, including the U.S. Fed, will feel pressured to act more aggressively to combat inflation. Meaning analysts could begin moving up timelines for when the Fed might end asset purchases and begin rate hikes, something that could weigh on bullish outlooks.

Earnings

It’s another busy day for earnings with highlights including BASF, Boeing, Bristol Myers Squibb, CME Group, Coca Cola, eBay, General Motors, Hilton Worldwide, Kraft Heinz, McDonald’s, Norfolk Southern, O’Reilly Automotive, Thermo Fisher, and Twilio. Alphabet (Google) and Microsoft announced after the market close yesterday with both blowing expectations out of the water.

Notably, Google’s advertising revenue, which rose +43%, didn’t appear to take any hits from changes made to Apple’s privacy policies, something cited by both Facebook and Snap. Both Google and Microsoft also saw continued robust growth in their cloud divisions with revenue climbing +45% and +31% respectively. Apple and Amazon will wrap up the the last of the so-called FAAMG stock earnings when they report tomorrow. Stay tuned…

Big Tech Pushing S&P 500… But How Does it End? Amazon, Apple, Facebook, Google, Microsoft and Tesla now make up 24% of the S&P 500. It seems like how they go so goes the overall stock market. Keep in mind, “Big Tech” now makes up about 40% of the entire S&P 500. If the trade finds Big Tech to be overvalued or in some type of bubble the market could take a sizable hit as it deflates.

Exchange Operator CME Group’s Profit Rises in Second Quarter

Sales volume for the exchange operator’s rates products, one of its top hedging products, was up nearly 25%.

CME‘s net profit rose to $510.3 million, or $1.42 per share, in the quarter ended June 30, from $503.3 million, or $1.40 per share, a year earlier.

On an adjusted basis, the company earned $1.64 per share. Analysts had expected a profit of $1.61 per share, according to IBES data from Refinitiv.

Total quarterly revenue was $1.18 billion, in line with a year earlier.

(Reporting by Niket Nishant in Bengaluru; Editing by Shounak Dasgupta)