What is Galaxy Digital?
Galaxy Digital is a publicly-traded technology company that provides institutional investors and individual investors with a comprehensive suite of financial services across a wide range of digital asset classes. Trading, asset management, investment banking, mining, and main investments are just a few of the services that they provide.
They have been participating in the cryptocurrency area since 2018, and they have 690 institutional trading counterparties with whom they do business in the space.
Mike Novogratz, the CEO of Galaxy Digital, is a former hedge fund manager who transitioned into cryptocurrency investment during the 2008 financial crisis, as he explained in an interview with CNBC:
In our industry, the amount of growth that we are going to experience will be breathtaking. We’ve only just gotten underway. At the moment, the overall crypto value is estimated to be around $2 trillion, accounting for around one-half of one percent of worldwide wealth. If you don’t believe that 2 percent to 3 percent growth can be achieved in the next two to three years, you aren’t paying attention to the current trends.”
As we reported earlier this week, the entire value of the cryptocurrency industry remains stable at $2 trillion. When he says that the overall crypto market capitalization would expand to 2-3 percent of global wealth, he is basically predicting that Bitcoin’s price will rise by 4-6 times more than it is currently trading at.
The following is another statement from Novogratz: “There has been a massive understanding that crypto is not only Bitcoin being purchased as a hedge against bad monetary and fiscal policies.” What’s more, it’s Web 3.0 technology. The last thing any investor wants to do is to miss the next internet.”
What is an Over The Counter Transaction?
Financial markets are often structured and operated in two ways: through exchanges and “over the counter,” sometimes known as OTC trading.
Trading occurs in the former when it comes to equities, for example, on the New York Stock Exchange (NYSE), and on cryptocurrency exchanges when it comes to Bitcoin and altcoins. In order to trade, traders publish their requests (the prices they are willing to sell at), and in order to purchase, traders post their bids (the prices they are willing to buy at). When a bid and an ask are in sync, the trade is executed in real time on the order books of both parties.
In an OTC transaction, also known as an over-the-counter transaction, exchanges between two parties are conducted more secretly, with one party serving as a “desk” (the business involved in buying and selling a particular form of an asset). The two parties come to an agreement on a price and then hammer out the details of the asset transfer between them.
A frequent method for big institutional investors and high-net-worth individuals, referred to as “whales,” to purchase Bitcoin without incurring slippage is through over-the-counter (OTC) deals.
Goldman Sachs and Galaxy Digital Have Announced an Over-the-counter (OTC) Cryptocurrency Exchange.
Goldman Sachs is expanding its presence in the embryonic market for contracts based on digital assets, reports Bloomberg.
CNBC was the first to disclose that the bank is the first major U.S. bank to engage in over-the-counter cryptocurrency trading. According to the two companies, Goldman exchanged a bitcoin-linked instrument known as a non-deliverable option with cryptocurrency merchant bank Galaxy Digital on Monday.
Because of the nature of over-the-counter (OTC) trading, the move is viewed as a significant step forward in the development of cryptocurrency markets for institutional investors. According to the businesses, by acting as a principal in the trades, Goldman Sachs is taking on more risk than the exchange-based CME Group bitcoin products on which it began trading last year.
In the opinion of Galaxy co-President Damien Vanderwilt, the involvement of Goldman Sachs, a leading participant in global traditional asset markets, is a reflection of the asset class’s greater maturity among institutional investors such as hedge funds.
During an interview, Vanderwilt stated that “this trade constitutes the first move that banks have made to offer direct, customized exposures to the crypto market on behalf of their clients.”
Compared to cleared futures or other exchange-based products, Vanderwilt asserted that options trades are “much more systemically important to market participants.” In part, this is due to the implications of the risk banks are taking on; they’re expressing their confidence in cryptocurrency’s maturity to this point,” says the author.
Hedge funds have been looking for ways to gain exposure to bitcoin through derivatives, either to make bets on its price without directly holding it or to hedge current exposure to it, according to the businesses that provided the information. The market for these products is dominated by crypto-native organizations like as Galaxy, Genesis, and GSR Markets, which have significant market share.
A statement from Max Minton, Goldman’s Asia Pacific head of digital assets, stated, “We are happy to have conducted our first cash-settled cryptocurrency options exchange with Galaxy.” In terms of our digital assets capabilities and the broader expansion of the asset class, this is a significant milestone, according to the company.
According to Andrei Kazantsev, Goldman’s global director of crypto trading, the bank has observed a significant increase in demand for options connected to digital assets in recent months.
According to him, the growth of options markets is the “next great step” that the company is planning.