Goldman Sachs’ bearish outlook puts Bitcoin at risk of falling as low as $12,000

Bitcoin derivatives data also shows that sentiment is shifting in favor of a massive drop below $20,000, the current psychological support.

A sequence of macro warnings coming out of the Goldman Sachs camp puts Bitcoin (BTC) at risk of crashing to $12,000.

Bitcoin in “bottom phase”?

A team of Goldman Sachs economists led by Jan Hatzius has raised its prediction on the speed of Federal Reserve benchmark rate hikes. They noted that the US central bank would raise rates by 0.75% in September and 0.5% in November, against their previous forecast of 0.5% and 0.25%, respectively.

The path of the Fed’s rate hikes has played a key role in determining how Bitcoin’s price will evolve in 2022. The period of rising interest rates—from near zero to the current 2.25-2.5% range — has prompted investors to rotate out of riskier assets and seek refuge in safer alternatives like cash.

Bitcoin is down almost 60% so far this year and is now teetering around its psychological support of $20,000. Some analysts, including pseudonymous trader Doctor Profit, believe that the price of BTC has entered the bottom phase at current levels. However, the trader warned:

“Please consider the FED’s upcoming decisions. 0.75% [rate hike] is 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 continued positive correlation with the US stock market, particularly the tech-heavy Nasdaq Composite, poses deeper downside risks.

Sharon Bell, a strategist at Goldman Sachs, suggests recent stock market rallies could be bull traps, echoing her firm’s warning that equities could plunge 26% if the Fed gets more aggressive with rate hikes. rates to combat inflation.

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

CME Bitcoin derivatives in the hands of smart money. Source: CFTC/Ecoinometrics

“It’s definitely a sign that some people are counting on a meltdown in risk assets this fall,” said Nick, an analyst at data source Ecoinometrics.

Options consensus sees BTC at $12,000

Bitcoin options expiring at the end of 2022 show that most traders are betting on the BTC price falling to the $10,000-12,000 zone. BTC options open interest per strike price. Source: Coinglass

Overall, the open interest ratio between calls and puts was 1.90 on September 18, with calls for the $45,000 strike price carrying the most weight. But strike prices between $10,000 and $23,000 showed at least four puts for every three calls, perhaps a more realistic tentative assessment of market sentiment.

From a technical point of view, Bitcoin price could drop by roughly 30% to $13,500 as the price forms a compelling inverse cup and handle pattern.

Conversely, a decisive breakout above the 50-day EMA (the red wave) near $21,250 could invalidate this bearish setup, positioning BTC for a rally to $25,000 as its next move. bullish psychological target.


Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.

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