Why Bitcoin could go back to $ 28,000, but by the end of 2022
Goldman Sachs analysts believe that Bitcoin and the cryptocurrency market may see some relief, but only further turmoil in the short and medium term. A recent report from the banking institutions claims that the crypto market has moved in step with the US stock market and thus has been affected by the macroeconomic environment.
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The analysis was conducted by Marion Labor and Galina Pozdnyakova and predicts a 30% rally for Bitcoin by the end of 2022. This is still far from the cryptocurrency’s previous all-time high of around $ 69,000.
The report fails to provide reasons that support the bearish theory. Analysts believe that Bitcoin’s correlation with the stock market will continue to play against it, and while they predict a bounce in equities, they believe that BTC’s price will lag behind in terms of performance.
For the stock market, the Goldman Sachs analysis predicts a resume on its bullish momentum and a potential setback to January 2022 levels. Meanwhile, Bitcoin could reach $ 28,000, which is over $ 10,000 less than the levels in January 2022.
Why will BTC perform worse than the stock market? It’s unclear. As usual for older institutions, analysts dismissed Bitcoin’s fundamentals and compared it to the diamond market, which they claimed flourished on the back of “marketing”:
By marketing an idea instead of a product, they built a solid foundation for the diamond industry of $ 72 billion a year, which they have dominated for the past eighty years. What is true of diamonds is true of many goods and services, including Bitcoins.
Analysts wrote the following about the factors that contribute to the complexity of measuring the value of Bitcoin and other cryptocurrencies, and why this may increase the downside risk:
It is difficult to stabilize token prices because there are no common valuation models like those within the public share system. In addition, the crypto market is very fragmented. Crypto-free fall may continue due to system complexity.
The short-term horizon for Bitcoin
As NewsBTC reported, experts familiar with the crypto industry believe that Bitcoin and other major market-value cryptocurrencies will continue to follow the stock market. Former CEO of the BitMEX cryptocurrency exchange Arthur Hayes expects that this correlation will contribute to the decline in BTC’s price.
However, at some point in 2022, the crypto market will begin to disconnect from equities and the major US stock indices, the S&P 500 and Nasdaq 100. The bullish momentum for digital assets can be supported by a decline in both the value of legacy markets and a downward trend when it concerns correlation with cryptocurrencies.
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As Hayes explained, this is when you want to be aware:
In order for me to raise the flag in support of selling fiat and buying crypto ahead of an NDX meltdown (30% to 50% reduction), the correlations across all time frames must trend demonstratively lower.
