Goldman Sachs (NYSE:GS) is eyeing a crucial position in the potential launch of Bitcoin (BTC-USD) ETFs (exchange-traded funds) by BlackRock (NYSE:BLK) and Grayscale. According to a CoinDesk report, the investment banking giant is engaged in discussions to serve as an authorized participant (AP) for these ETFs.
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An AP plays a key role in the creation and redemption process of ETF shares within the primary market. Moreover, they ensure that the ETF’s market price is in line with the value of its underlying securities. Thus, it sets up a chance for APs to make money through arbitrage. For example, if the ETF trades at a premium to its NAV (Net Asset Value), APs can create new shares, sell them at a higher price, and earn a profit. Simultaneously, if the ETF trades at a discount, APs can buy ETF shares at the lower market price, redeem them for the underlying securities, and sell them at their higher NAV, again making a profit.
Per the report, Goldman Sachs will join top financial services giants such as JPMorgan Chase (NYSE:JPM) and Cantor Fitzgerald, aiming to take on the role of an AP for over a dozen companies seeking the SEC’s permission to offer Bitcoin ETFs.
With this background, let’s look at what analysts recommend for Goldman Sachs’ stock.
Is Goldman Sachs a Buy or Sell?
Goldman Sachs’ financials are taking a hit due to the continued weakness in the investment banking segment. Thus, analysts remain cautiously optimistic about the bank’s prospects.
With 11 Buy and five Hold recommendations, Goldman Sachs stock has a Moderate Buy consensus rating. Further, the average GS stock price target of $393.47 indicates a limited upside potential of 3.06% from current levels.
