This is why Goldman Sachs clients are now focused on Bitcoin

Speculation surrounding Bitcoin's upcoming halving has caused a significant shift in investor sentiment. For example, Goldman Sachs is seeing increased interest in the crypto market from its hedge fund clients.

This revival of enthusiasm is not limited to speculative individual investors but also sophisticated institutional investors.

Goldman Sachs investors want to bet on Bitcoin

Max Minton, Goldman Sachs' Asia Pacific head of digital assets, said the approval of Bitcoin exchange-traded funds (ETFs) sparked interest among the firm's clients. Many of them are actively investing in the crypto market or studying the potential of doing so.

“Last year was more quiet, but since the beginning of the year we've seen customers gain interest in onboarding, plumbing and volume,” Minton said.

Goldman's current clients, primarily conventional hedge funds, generate the most interest. In addition, the institution is expanding its reach to include a diverse clientele. These include asset managers, own banking clients and certain firms specializing in digital assets.

Minton noted that clients engage with cryptocurrency exchanges to make speculative predictions, leverage and hedge. He also pointed out that Bitcoin-related products will continue to attract a lot of attention from customers. However, the level of interest in Ethereum-related products may change depending on the adoption of Ethereum ETFs in the US.

This renewed interest can also be attributed to the upcoming Bitcoin halving. This event, which is scheduled for the end of April, will cut the mining reward for Bitcoin in half, which will motivate miners to upgrade to efficient technology to maintain profitability. This quadrennial update is critical to sustaining Bitcoin's economic model, with the reward reduced from the current 6.25 to 3.125 BTC.

Read more: Bitcoin half-cycles and investment strategies: What you need to know

After the first half of 2012, Bitcoin's market capitalization increased by more than 8,000%. Similarly, following the 2016 halving, Bitcoin's price has risen more than 1,400%. Meanwhile, after halving in 2020, it has increased more than 700%.

Although the stock-to-flow (S2F) model, commonly applied to commodities such as gold, is flawed, it serves as a method for evaluating Bitcoin's value. This model has shown a historical correlation with Bitcoin price fluctuations. As bitcoin continues to depreciate, experts predict that its value will likely rise above its current value.

“Bitcoin (BTC) is poised for another seismic shift, with its next halving event likely in April 2024. Historically, there has been a correlation between halving events and BTC price increases. A stock-to-flow model could see BTC rise above $130,000 by 2028, writes Pedro Palandarani, a researcher at GlobalX.

Read more: Bitcoin price prediction for 2024/2025/2030

From trading to blockchain innovation, Goldman Sachs' involvement with the cryptocurrency market reflects broader institutional acceptance of digital assets. As it halves, the bank's active stance on digital assets, growing demand from its customers, represents a critical moment in the cryptocurrency market.