A series of macro warnings from the Goldman Sachs camp put Bitcoin (BTC) at risk of crashing to $12,000.
Bitcoin in ‘bottom stage’?
A team of Goldman Sachs economists led by Jan Hatzius raised their expectations on the speed of the Federal Reserve’s benchmark interest rate hike. They noted that the US central bank will raise interest rates by 0.75% in September and 0.5% in November, up from their previous expectations of 0.5% and 0.25%, respectively.
The trajectory of the Fed rate hike has played a major role in determining bitcoin price trends in 2022. The period of rising lending rates – from near zero to a range of 2.25-2.5% now – has prompted investors to exit riskier assets and seek shelter in them. . Safer alternatives such as cash.
Bitcoin is down nearly 60% since the beginning of the year, and is now teetering around its psychological support of $20,000. Some analysts, including trader with the pseudonym Doctor Profit, believe that the price of BTC has entered the bottom line at the current levels. However, the merchant cautioned:
“Please consider the following Federal Reserve decisions. The 0.75% [rate hike] is already priced in, 1% and we’re seeing blood.”
BTC/USD price performance comparison between 2012-2016 and 2020-2022. Source: Doctor Profit / TradingView
On the other hand, Bitcoin’s consistently positive correlation with the US stock market, particularly the high-tech Nasdaq Composite, poses a deeper correction risk.
Sharon Bell, a strategist at Goldman Sachs, points out that recent stock market rallies may be bull traps, echoing her company’s warning that stocks could crash 26% if the Federal Reserve becomes bolder with its rate increases to fight inflation.
Interestingly, the warnings coincide with the recent surge in Bitcoin short positions held by institutional investors, according to CME data outlined in the CFTC’s weekly report.
CME Bitcoin derivatives held by smart money. Source: CFTC / Ecoinometrics
“It’s definitely a sign that some people are counting on the risk of an asset crash this fall,” Nick, an analyst at data resource Ecoinometrics, noted.
Options Compatibility See BTC at $12,000
Bitcoin options expiring at the end of 2022 shows that most traders are betting on the price of BTC dropping all the way to the $10-000-12000 region.
BTC options unlock interest at the strike price. Source: Coinglass
Overall, the buy-to-be open ratio was 1.90 on September 18, with the maximum weight for call options at the strike price of $45,000. But the strike in prices between $10,000 and $23,000 showed at least four options for every three orders – perhaps a more realistic tentative assessment of market sentiment.
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From a technical perspective, the price of Bitcoin could drop by about 30% to $13,500 as the price forms an inverse upwards pattern and a convincing handle.
BTC/USD daily price chart with cup distribution setting and inverted handle. Source: TradingView
Conversely, a decisive rise above the 50-day EMA (the 50-day EMA; red wave) near $21,250 could invalidate this bearish setup, setting BTC higher towards $25,000 as a target. I climb myself up next.