Goldman Sachs estimates Bitcoin could drop to $12,000! Today's session drop pushed Bitcoin back below the $20,000 threshold. For many, this fall could lead to a more massive one. According to the American bank Goldman Sachs, Bitcoin could even drop to $12,000. Let's see what the financial giant is basing this prediction on.
The FED never far away.
For months, inflation and the response of central banks have been raining or shining on the crypto market. And at the forefront of these central banks, we find the FED, a true barometer of the crypto market. Because to break the inflationary spiral, the entity has been pursuing an aggressive policy of raising rates for several months.
It is precisely in relation to a new rate hike that the American bank published this forecast, to say the least pessimistic. Because if the markets so far anticipated a further rise of 0.5% in September and 0.25% next November, it would seem that the consensus has changed.
Thus, the month of September could see an increase in the key interest rate of 0.75%, while the increase would be 0.50% in November. And some are already alerting to a potentially higher rise.
This is particularly the case of the trader known under the pseudonym “ Doctor Profit ”.
"Please take into account the next decisions of the FED. A 0.75% rate hike is already priced in, 1% and we see blood.”
In the space of just a few months, the key interest rate has gone from 0 to a range between 2.25 and 2.50%. And the rise is not over. The current consensus states that 86% of economic agents expect a 0.75% increase at the next Fed meeting.
The rest of the respondents expect a rise of one basis point. Answer this Wednesday at the next meeting of the FOMC (Federal Market Open Committee) which will announce the extent of the increase.
Good to know: Just a month ago, 53% of respondents expected to see a key rate between 275 and 300 basis points after the September meeting. But the poor US inflation figures published for August have completely destroyed these prospects.
Bitcoin and the crypto market remain correlated to equity markets.
If this relationship has sometimes not been obvious, it is clear today. When the FED intervenes, all the risky markets react in the same way. If volatility is still higher in the crypto market, it is clear that the two markets are moving together.
For many observers, this positive correlation, especially with the largest indices such as the NASDAQ Composite, poses a problem. Specifically, because these are indexes composed primarily of technology stocks.
Sharon Bell, a strategist at Goldman Sachs, points out that the recent rallies in the stock market could be just bull traps. Not long ago, the American bank also specified that the equity market could drop by more than 25% if the FED accelerated its rate hike policy. And with hindsight of the last few months, it's hard to imagine that the decline wouldn't be even more violent in the digital asset market.
These warnings from one of the most powerful banks in the world also coincide with the increase in short positions on Bitcoin. If individuals are having a field day, institutional investors are also following this trend. As the latest CFTC (Commodity Futures Trading Commission) report shows.
A $12,000 consensus?
Analysis of Bitcoin options expiring at the end of the year suggests that traders are betting on a fall in the mother of cryptocurrencies. And this one could be in the area of 10 - 12,000 dollars. As Ecoinometrics, a specialist in stock market analysis points out:
"This is certainly a sign that some people are counting on a collapse in risk assets this fall."
For many investors, this reading leads to fear. Especially since it seems to be validated via other technical indicators. Moreover, the current so-called “ inverse up-and-handle ” pattern suggests a rather bearish movement. According to this reading, Bitcoin could bounce up to $13,500.
But for all that, the bearish scenario could be invalidated. For this and among the key variables, some believe it is important for Bitcoin to break above its 50-day exponential moving average.
An MME is now close to $21,250. A passage above this threshold could then invalidate the bearish pattern and position Bitcoin on the tracks of a bullish rally towards $25,000. This would be a new psychological threshold for the most famous crypto asset in the world.
The graph below, accessible from the Tradingview platform, shows the evolution of the Bitcoin price in daily data since last February:
The blue line materializes the moving average of the asset at 50 days. A few days ago, the asset had moreover passed above this threshold, but the publication of the poor inflation figures had immediately plunged it back below.
As of this writing, Bitcoin is trading for $19,172. Compared to its all-time high recorded last November, the mother of cryptocurrencies has just given up more than 70% of its value. And as Goldman Sachs suggests, it may not be over yet.
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