Goldman Sachs analysts think Bitcoin and its crypto market might see some relief. However, this will only be temporary and not long-term. According to a recent report by banks, the crypto market is moving along with the U.S. stock markets and has thus been affected negatively by macroeconomic conditions.
Similar Reading| Why Bitcoin Could Collapse Another 50%, Says Michael “Big Short” Burry
Marion Laboure and Galina Pzdnyakova performed the analysis. It predicts that Bitcoin will rise by 30% before 2022. This is still far from the cryptocurrency’s previous all-time high of around $69,000.
This report does not support the bearish hypothesis. The analysts believe that Bitcoin’s correlation with the stock market will continue to play against it, and while they predict a bounce in equities, they believe BTC’s price will lag in terms of performance.
The Goldman Sachs analysis of the stock market predicts that it will resume its bullish momentum, and possibly bounce back to January 2022 levels. Bitcoin may reach $28,000, which would be more than $10,000 lower than the January 2022 level.
Why does BTC outperform the stock exchange? This is not obvious. As usual for legacy institutions, the analysts dismissed Bitcoin’s fundamentals and compared it to the diamonds market which they claimed to bloomed on the back of “marketing”:
They built the foundation of the $72 million-a-year diamond market by marketing ideas rather than products. This industry has been their dominant force for over eighty years. What’s true for diamonds, is true for many goods and services, including Bitcoins.
Analysts compiled the following information on how to determine the complexity of Bitcoin’s price and the reasons why it could be more risky.
Because there is no standard valuation model for tokens, stabilizing their prices can be difficult. This could also make it more challenging than the ones used by public equity. The crypto market is also highly fragmented. The crypto freefall could continue because of the system’s complexity.
Bitcoin: The short-term outlook
NewsBTC reports that experts who are more familiar with crypto market believe Bitcoin and large cryptocurrencies will continue to follow the stock market. Former CEO of crypto exchange BitMEX Arthur Hayes expects this correlation to contribute to the decline in BTC’s price.
However, at some point during 2022, the crypto market will start to decouple from stocks and the U.S. major equities indexes, the S&P 500 and Nasdaq 100. A decline in the market value and a downward trend in correlation to cryptocurrencies could support the bullish momentum in digital assets.
Similar Reading: Ethereum (ETH), Bends towards $1,000 as Doubt Fills Crypto Markets| Ethereum (ETH) Bends Toward $1,000 As Doubt Fills Crypto Markets
As Hayes explained, that’s when you want to pay attention:
In order for me to raise the flag to sell fiat and buy crypto before an NDX meltdown (30% to 50% drawdown), all correlations need to be demonstratively lower.