Goldman Sachs Approves First Bitcoin-Backed Loan Facility

Key Insights:

• This week, Goldman Sachs issued its first Bitcoin (BTC) backed loan.
• The collateralized facility includes 24-hours risk management
• Goldman Sachs continues to push the envelope as it explores the tokenization of financial instruments.

Goldman Sachs is taking big strides in becoming a leading bank in the digital asset space. In May 2021, the US investment bank rebooted its cryptocurrency desk in response to improving crypto market conditions.

Goldman first established a crypto desk in 2018.

This week, Goldman took another big step into the digital asset world.

Goldman Sachs Issues Bitcoin-Backed Cash Loan

On Thursday, news hit the wires of Goldman Sachs offering its first Bitcoin (BTC) backed loan facility.

According to the report, the borrower pledged Bitcoin as collateral in a cash loan.

As a first-mover on Wall Street, the bank reportedly found the deal interesting due to its structure and need for 24-hour risk management.

The latest link between digital assets and fiat follows last month’s first over-the-counter (OTC) crypto trade with Galaxy Digital. According to the CNBC report, Goldman was “the first major US bank to trade crypto over the counter.”

This week, there was also news of Goldman Sachs exploring the tokenization of financial instruments.

While Goldman Sachs may be a first-mover among the banking fraternity, crypto-linked financial products are becoming more commonplace.

Crypto-Linked Financial Products Are More Mainstream than Ever

It is a busy year for cryptos and financial institutions.

This week, DeFi protocol Portal partnered with HighCircleX (HCX) to tokenize pre-initial public offering (IPO) company stocks. The partnership addresses the issue of illiquidity by tokenizing pre-IPO stocks. HCX marketplace then supports the trading of the tokenized assets.

In April, crypto firm XBTO offered Bitcoin collateralized mortgages in Miami. The product allows Bitcoin holders to avoid capital gains tax and benefit from any upward trend in Bitcoin value.

According to Thursday’s Bloomberg report, the co-president of Galaxy Digital Holdings Damien Vanderwilt recently said,

“Lending to companies that provide virtual currencies as collateral is the next step.”

With US banking giants Goldman Sachs, JPMorgan, and Citi also bullish about NFTs and metaverse, we expect more bank-linked digital and virtual news to hit the crypto wires in the months ahead.

Bitcoin Price Action

At the time of writing, Bitcoin was down by 0.10% to $39,715.

Technical Indicators

Bitcoin will need to avoid the day’s $39,678 pivot to target the First Major Resistance Level at $40,461. Bitcoin would need broader market support to a return to $40,000.

In the event of an extended rally, Bitcoin could test the Second Major Resistance Level at $41,173 and resistance at $41,500. The Third Major Resistance Level sits at $42,668.

A fall through the pivot would bring the First Major Support Level at $38,968 into play. Barring another extended sell-off, Bitcoin should avoid sub-$38,000. The Second Major Support Level at $38,186 should limit the downside.

Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal. Bitcoin sits on the 50-day EMA, currently at $39,759. This morning, we saw the 50-day EMA narrow to the 100-day EMA, delivering support. The 100-day EMA pulled back from the 200-day EMA, BTC negative.

A move through the 100-day EMA at $40,420 would support a run at $42,000.