Goldman Sachs Warns Bitcoin Increasingly Vulnerable to Fed Rate Hikes as Mainstream Adoption Grows

Global concern slope Goldman Sachs has warned that bitcoin is progressively susceptible to the Federal Reserve’s complaint hikes arsenic the cryptocurrency grows much wide adopted. “Over the past 2 years, arsenic bitcoin has seen wider mainstream adoption, its correlation with macro assets has picked up,” the Goldman analysts explained.

Global concern slope Goldman Sachs published a research enactment Thursday detailing bitcoin’s accrued vulnerability to the Federal Reserve hiking involvement rates.

Zach Pandl, bank’s co-head of overseas speech strategy, and FX expert Isabella Rosenberg explained that arsenic mainstream adoption of bitcoin increases, truthful does the cryptocurrency’s vulnerability to Fed policy. They described:

Over the past 2 years, arsenic bitcoin has seen wider mainstream adoption, its correlation with macro assets has picked up.

Noting that higher enslaved yields person affected exertion stocks successful caller weeks, with the Nasdaq 100 scale falling much than 13% for the year, the analysts noted: “Bitcoin and different integer assets person apt suffered from the aforesaid forces … These assets volition not beryllium immune to macroeconomic forces, including cardinal slope monetary tightening.”

The markets present expect the Fed to hike involvement rates 5 times this year. Goldman Sachs believes that the Fed could rise involvement rates astatine each gathering this year. The post-meeting connection from the Federal Open Market Committee (FOMC) past week did not supply a circumstantial clip for erstwhile the summation volition come, though indications are that it could hap as soon arsenic the March meeting.

Goldman’s analysts further commented:

Over time, further improvement of blockchain technology, including applications successful the metaverse, whitethorn supply a secular tailwind to valuations for definite integer assets.

Recently, Goldman Sachs said that the metaverse could beryllium an $8 trillion opportunity. Rival concern slope Morgan Stanley likewise estimated a comparable size for the metaverse.

Earlier this month, Goldman Sachs predicted that bitcoin could scope $100,000 arsenic the cryptocurrency continues to instrumentality gold’s marketplace share. Meanwhile, Switzerland’s largest bank, UBS, has warned of a crypto winter amid expectations of Fed complaint hikes and regulation. At the clip of writing, bitcoin is trading astatine $37,502 based connected information from Bitcoin.com Markets. The crypto is up 6.6% successful the past 7 days but down 20.5% successful the past 30 days. However, it is inactive up 9.8% for the year.

A caller study by Crypto.com shows that the fig of global crypto owners is expected to surpass 1 cardinal this year.

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