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 a risk of crashing to $12,000.

Bitcoin in “bottom phase?”

A team of Goldman Sachs economists led by Jan Hatzius raised their prediction for the speed of Federal Reserve benchmark rate hikes. They noted that the U.S. central bank would increase rates by 0.75% in September and 0.5% in November, up from their previous forecast of 0.5% and 0.25%, respectively.

Fed’s rate-hike path has played a key role in determining Bitcoin’s price trends in 2022. The period of higher lending rates – from near zero to the 2.25-2.5% range now – has prompted investors to rotate out of riskier assets and seek shelter in safer alternatives like cash.

Bitcoin has dropped by almost 60% year-to-date and is now wobbling around its psychological support of $20,000. Some analysts, including a pseudonymous trader Doctor Profit, believe BTC’s price has entered the bottom phase at current levels. However, the trader warned:

“Please consider FEDs next decisions. 0.75% [rate hike] already priced in, 1% and we see blood.”

BTC/USD price performance comparison between 2012-2016 and 2020-2022. Source: Doctor Profit/TradingView

On the other hand, Bitcoin’s consistently positive correlation with the U.S. stock market, particularly the tech-heavy Nasdaq Composite, poses deeper correction risks.

Sharon Bell, a strategist at Goldman Sachs, suggests the recent rallies in the stock market could be bull traps, echoing her firm’s warning that equities could crash by 26% if the Fed gets more aggressive with its rate increases to fight inflation.

Interestingly, the warnings coincide with a recent rise in Bitcoin short positions held by institutional investors, according to CME data highlighted in the Commodity Futures Trading Commission’s (CFTC) weekly report.

CME Bitcoin derivatives held by smart money. Source: CFTC/Ecoinometrics

“Definitely a sign that some people are counting on a risk asset meltdown 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 most traders betting on the BTC price dropping all the way down to the $10-000-12,000 area.

BTC options open interest by strike price. Source: Coinglass

Overall, the call-put open interest ratio was 1.90 on Sep. 18, with call options for the $45,000 strike price carrying the 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, interim evaluation of market sentiment.

Related: Tired of losing money? Here are 2 reasons why retail investors always lose

From a technical perspective, Bitcoin’s price could drop by roughly 30% to $13,500 as the price forms a convincing inverse up-and-handle pattern.

BTC/USD daily price chart with inverse cup-and-handle breakdown setup. Source: TradingView

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 toward $25,000 as its next psychological upside target.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

All Dutch and English crypto news!

329 Japanese companies support Astar Network’s Nikkei ad

Astar Network's latest ad has gained support from over 300 Japanese companies as it looks to spearhead the growth of Japan's web3 ecosystem.   Astar Network, a...

What Cardano’s Vasil hard fork means for the blockchain

After several delays and some setbacks, Cardano's long-awaited Vasil upgrade finally went live on Sept. 22. From the outside looking in, the hard fork is...

Cardano bulls run out of steam after Vasil hard fork — 40% ADA price crash in play

Cardano's (ADA) long-awaited Vasil update went live on Sept. 22, which promises to make its blockchain more scalable and cheaper than before. However, this has...

Terra (LUNA) oprichter Do Kwon wordt gezocht in 195 landen

Het wordt steeds moeilijker voor Do Kwon om zich schuil te houden. De oprichter van Terra (LUNA) wordt nu niet alleen in Zuid Korea, maar...

Beste exchanges

Koop je crypto bij Bitvavo