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/TradingViewOn 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: CoinglassOverall, 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.
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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: TradingViewConversely, 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.
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