Goldman Sachs’ bearish macro outlook puts Bitcoin at risk of crashing to $12K
A sequence of macro warnings coming out of the Goldman Sachs camp puts Bitcoin (BTC) at risk of crashing to $12,000.
Bitcoin in the “rock bottom phase?”
A team of Goldman Sachs economists led by Jan Hatzius raised their forecast for the speed of the Federal Reserve’s benchmark interest rate hikes. They noted that the US Federal Reserve would raise interest rates by 0.75% in September and 0.5% in November, up from their previous forecast of 0.5% and 0.25% respectively.
The Fed’s rate hike trajectory has played a key role in determining Bitcoin’s price trends in 2022. The period of higher lending rates – from near zero to 2.25-2.5% now – has caused investors to rotate out of riskier assets and seek refuge in safer options as cash.
Bitcoin has fallen by nearly 60% so far this year and is now hovering around its psychological support of $20,000. Some analysts, including pseudonymous trader Doctor Profit, believe that BTC’s price has entered the bottom phase at today’s levels. But the entrepreneur warned:
“Please consider the FED’s next decisions. 0.75% [rate hike] already priced in, 1% and we’re seeing blood.”
On the other hand, Bitcoin’s consistently positive correlation with the US stock market, especially the tech-heavy Nasdaq Composite, poses deeper correction risk.
Sharon Bell, a strategist at Goldman Sachs, suggests the recent stock market rallies could be bull traps, echoing the firm’s warning that stocks could crash 26% if the Fed gets more aggressive with its rate hikes to fight inflation.
Interestingly, the warnings coincide with a recent increase in Bitcoin short positions held by institutional investors, according to CME data highlighted in the Commodity Futures Trading Commission’s (CFTC) weekly report.
“Definitely a sign that some people are expecting a meltdown in risk assets this fall,” noted Nick, an analyst at data resource Ecoinometrics.
Options consensus see BTC at $12K
Bitcoin options expiring at the end of 2022 show that most traders are betting that the BTC price will fall all the way down to the $10,000-12,000 range.
Overall, the call-put open ratio was 1.90 on September 18, with call options at the $45,000 strike price carrying maximum weight. But strike prices between $10,000 and $23,000 showed at least four puts for every three calls — which is perhaps a more realistic, preliminary assessment of market sentiment.
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From a technical perspective, Bitcoin’s price could fall by about 30% to $13,500 as the price forms a compelling inverse up-and-hand pattern.
Conversely, a decisive rally above the 50-day exponential moving average (50-day EMA; the red wave) near $21,250 could invalidate this bearish setup, positioning BTC for a rally towards $25,000 as its next psychological upside target.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trade involves risk, you should do your own research when making a decision.
