Goldman Sachs Analysts Believe Bitcoin and the cryptocurrency market could see some respite, but only more short and medium-term turmoil. A recent report by banking institutions claims that the cryptocurrency market is moving in tandem with the US stock market, and thus has been affected by the macroeconomic environment.
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The analysis was conducted by Marion Laboure 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 at around $69,000.
The report fails to provide reasons in support of the bearish theory. Analysts believe that Bitcoin’s correlation with the stock market will continue against it, and while they anticipate a rebound in stocks, they believe that the price of BTC will lag in terms of performance.
As for the stock market, Goldman Sachs analysis anticipates a resumption of its upward momentum and a possible bounce back to January 2022 levels. Meanwhile, Bitcoin could reach $28,000, which is $10,000 less than its January 2022 levels.
Why will bitcoin’s performance weaken in the stock market? It is not clear. As usual for older institutions, analysts ignore Bitcoin’s fundamentals and compare it to the diamond market that they claim has thrived on the back of “marketing”:
By marketing an idea rather than a product, they have built a solid foundation for the $72 billion a year diamond industry, which they have dominated for the past 80 years. What is true of diamonds, is true of many goods and services, including bitcoin.
The analysts wrote the following about the factors that contribute to the complexity of measuring value in Bitcoin and other cryptocurrencies, and why this may increase downside risks:
It is difficult to fix token prices because there are no common valuation models like those in the public equity system. In addition, the cryptocurrency market is highly fragmented. The free fall of cryptocurrencies can continue due to the complexity of the system.
Bitcoin’s short-term horizon
Like NewsBTC mentionedExperts most familiar with the cryptocurrency industry believe that Bitcoin and other large cryptocurrencies by market capitalization will continue to follow the stock market. Former BitMEX CEO Arthur Hayes expects this correlation to contribute to the decline in the price of BTC.
However, at some point during 2022, the cryptocurrency market will start to separate from stocks and the major US stock indices, the S&P 500 and Nasdaq 100. The upward momentum of digital assets can be supported by a drop in the value of both legacies. Markets are down trend in terms of correlation with cryptocurrencies.
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As Hayes explained, that’s when you want attention:
For me to raise the flag to support selling coins and buying cryptocurrencies before the NDX crash (down 30%-50%), correlations across all time frames should be clearly bearish.