Goldman Sachs warns Bitcoin increasingly vulnerable to Fed rate hikes as mainstream adoption grows – Bitcoin News
Global investment bank Goldman Sachs has warned that bitcoin is increasingly vulnerable to Federal Reserve rate hikes as the cryptocurrency becomes more widely adopted. “Over the last two years, as bitcoin has seen a broader mainstream adoption, the correlation with macro assets has picked up,” Goldman analysts explained.
Goldman Sachs warns Bitcoin increasingly vulnerable to Fed rate hikes
On Thursday, the global investment bank Goldman Sachs published a research note describing bitcoin̵[ads1]7;s increased vulnerability to interest rate increases from the Federal Reserve.
Zach Pandl, the bank’s co-head of currency strategy, and currency analyst Isabella Rosenberg explained that as the mainstream adoption of bitcoin increases, so does the vulnerability of cryptocurrency to Fed policy. They described:
Over the past two years, as bitcoin has seen a broader mainstream adoption, the correlation with macro assets has picked up.
Analysts noted that higher bond yields have affected technology stocks in recent weeks, with the Nasdaq 100 index falling more than 13% for the year, noting: “Bitcoin and other digital assets have probably suffered from the same forces … These assets will do not become immune to macroeconomic forces, including monetary tightening by central banks. “
Markets now expect the Fed to raise interest rates five times this year. Goldman Sachs believes the Fed could raise interest rates at each meeting this year. The statement after the meeting of the Federal Open Market Committee (FOMC) last week did not give a specific time for when the increase will come, although indications are that it may happen as soon as the March meeting.
Goldman’s analysts further commented:
Over time, further development of blockchain technology, including metaverse applications, can provide a secular tailwind to valuations of certain digital assets.
Goldman Sachs recently said that the metaverse could be a $ 8 trillion option. The rival investment bank Morgan Stanley similarly estimated a comparable size for the metaverse.
Earlier this month, Goldman Sachs predicted that bitcoin could reach $ 100,000 as the cryptocurrency continues to take gold’s market share. Meanwhile, Switzerland’s largest bank, UBS, has warned of a crypto winter amid expectations of interest rate hikes and adjustments from the Fed. At the time of writing, bitcoin is trading at $ 37,502 based on data from Bitcoin.com Markets. The crypto is up 6.6% in the last seven days, but down 20.5% in the last 30 days. However, it is still up 9.8% for the year.
A recent report from Crypto.com shows that the number of global crypto owners is expected to exceed 1 billion this year.
Do you agree with Goldman Sachs? Let us know in the comments section below.
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