Goldman Sachs Expands Bitcoin Exposure with $1.5B ETF Investment

Bank grows crypto portfolio amid Bitcoin's record-breaking rally.

Goldman Sachs has significantly ramped up its cryptocurrency holdings, with Bitcoin ETF investments soaring to $1.5 billion in the fourth quarter of 2024, according to recent SEC filings. This marks a remarkable 121.1% increase from the firm’s $710 million stake in the previous quarter, underscoring the bank's growing interest in digital assets as Bitcoin hits new all-time highs.

The majority of Goldman’s crypto investment is concentrated in BlackRock’s iShares Bitcoin Trust (IBIT), where the bank holds 24.07 million shares valued at $1.27 billion—an 88% jump from Q3. Additionally, Goldman increased its stake in Fidelity’s Wise Origin Bitcoin Fund (FBTC) by 105%, now holding $288 million. A smaller position of $3.6 million remains in Grayscale’s Bitcoin Trust (GBTC).

Beyond ETF holdings, Goldman has delved into options trading, with $760 million allocated to derivative positions. This includes a $527 million put position via IBIT, an $84 million put through FBTC, and a $157 million call position on IBIT, signaling a balanced strategy aimed at both risk management and potential upside.

The bank’s crypto exposure isn’t limited to Bitcoin. Its Ethereum investments surged to $476.5 million in Q4, up dramatically from just $25.1 million the previous quarter. This exposure is split nearly evenly between Fidelity’s FETH ($234.7 million) and BlackRock’s ETHA ($235.5 million).

Goldman also made strategic adjustments by closing smaller positions in other Bitcoin ETFs, including ARK 21Shares (ARKB), Bitwise (BITB), and WisdomTree (BTCW), consolidating its focus on the largest and most liquid products.

This aggressive expansion coincides with Bitcoin’s price climbing to a record $109,000 ahead of the U.S. Presidential inauguration, fueled by increasing institutional adoption and speculative interest. The cryptocurrency posted a 40.6% gain during Q4 alone, while Ethereum rose by 26.2%, according to CoinGecko data.

Despite these substantial investments, Goldman Sachs CEO David Solomon maintains a cautious stance. In a recent interview, Solomon emphasized that Bitcoin poses no threat to the U.S. dollar's dominance, framing it instead as a speculative asset with potential. He also highlighted the need for regulatory clarity before the bank fully embraces direct crypto trading.

Regulatory developments remain a key factor. The SEC is currently reviewing proposals, including BlackRock’s push for in-kind Bitcoin ETF redemptions, which could reshape market dynamics by allowing redemptions in Bitcoin rather than cash.

Goldman’s investment strategy reflects both bullish sentiment and prudent risk management, leveraging a mix of spot ETF holdings and derivatives. As institutional interest continues to grow, Goldman’s aggressive positioning signals that Wall Street’s relationship with crypto is evolving from skepticism to strategic adoption.

photo source / Blockonome