Peter Brandt, a favorite veteran dealer and CEO of proprietary trading company Factor LLC, recently gave his thoughts on Goldman Sachs possibly restarting its cryptocurrency desk.
On Dec. 21, 2017, a similar Bloomberg slice stated the Goldman Sachs would establish a cryptocurrency trading desk, even although the bank was”still trying to solve security difficulties.”
Although Brandt’s chart seems significant, one ought to understand that such speculation had been continuing for a couple of months. The Wall Street Journal already covered Goldman Sachs’ intention to do so on Oct. 2, 2017.
Even if we dismiss the exact date, then Goldman Sachs apparently ditched these plans to establish its Bitcoin (BTC) trading desk.
The incoming retail demand was so impressive that it caused the trades Binance, Bitfinex and Bittrex to deny new users temporarily.
Binance accounts were even sold by consumers straight to other users in the time when no fresh sign-ups were being accepted. In other words, there is currently no retail frenzy in Bitcoin similar to what happened in late 2017. In reality, the present bull cycle appears to be driven by institutions which are apparently scooping up BTC on each dip.
Meanwhile, the $66 billion daily average traded volume found on Feb. 22, since Bitcoin’s market capitalization peaked at $1.09 trillion, had been relatively flat for the past six weeks.
Therefore, an experienced technical analyst such as Brandt should have included the caveat that volume is the most important market participation indicator — that he frequently emphasizes in his additional investigations.
To settle this difference permanently, one needs to understand the basics of futures markets. Derivatives exchanges charge perpetual futures longs (buyers) or shorts (sellers) a commission every eight hours to maintain a balanced risk vulnerability. This indicator, known as the financing speed, will turn optimistic when longs are the ones requiring more leverage.
As the above chart indicates, buyers were willing to pay as much as 40% per week to leverage their long positions. This is completely unsustainable and a indication of extreme optimism. Any market recession would have caused cascading liquidations, together with all the BTC price accelerating into the disadvantage.
Such exorbitant rates no more exist, albeit the present 4% per week funding rate has been the highest since June 2019.
Lastly, an individual should factor in that December 2017 marked the launching of CME and CBOE futures contracts. As Cointelegraph astutely put back then: “This unprecedented event might have a significant effect on this Bitcoin economy” In retrospect, this appears to have been the peak euphoria indicate the bears were awaiting.
However, while Brandt has become well known at the cryptocurrency area for anticipating the 80 percent -and correction following the 2017 Bitcoin price high, his track record has been less impressive in recent times.
Therefore, to sum up, there’s zero evidence to support Brandt’s theory besides a single event that happened once in the 11 years of Bitcoin trading. And of course that the 2017 Goldman Sachs cryptocurrency trading desk rumors had been going for a short time.
