Goldman Sachs Says Mainstream Crypto Adoption Not Enough to Boost Bitcoin (BTC) Price

Bhushan Akolkar
January 28, 2022
Why Trust CoinGape
CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
Bitcoin Mayhem: Will The Turmoil In Kazakhstan Precipitate A Repeat Of The May 2021

Bitcoin has witnessed a heavy correction this year along with the U.S. equity market plunging down as the Fed hints at interest rate hikes ahead this year. Although bitcoin has been correcting a lot, its adoption among mainstream retail investors is growing.

But banking giant Goldman Sachs believes that it won’t be enough to boost the Bitcoin price. In a note to investors on Thursday, January 27, Goldman strategists Zach Pandl and Isabella Rosenberg wrote that despite Bitcoin gaining mainstream appeal, its correlation to other macro assets also has been on the rise.

Strong liquidations in Bitcoin and crypto have often followed the liquidations in the equity market. As per the Bloomberg data, Bitcoin’s correlation with the S&P 500 has reached the highest ever.

Courtesy: Bloomberg

Bitcoin’s Positive Correlation With Proxies

The report shows that the price of Bitcoin has been positively correlated with some of the “frontier” technology stocks, crude oil prices as well as proxies for consumer-price risk like breakeven inflation. On the other hand, Goldman notes that Bitcoin has been negatively correlated with USD and real estate. It explains:

Crypto’s recent selloff underscores that “mainstream adoption can be a double-edged sword,” the strategists wrote. “While it can raise valuations, it will also likely raise correlations with other financial market variables, reducing the diversification benefit of holding the asset class.”

The recent fall in the crypto market has been because of the Fed hinting at rising interest rates ahead this year owing to a high inflation. The strategists added: “Over time, further development of blockchain technology, including applications in the metaverse, may provide a secular tailwind to valuations for certain digital assets. But these assets will not be immune to macroeconomic forces, including central bank monetary tightening.”

Bitcoin and many other altcoins have already corrected more than 50% from their all-time highs. Do you thing, the BTC price can further tank under $30,000?

Advertisement
coingape google news coingape google news
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.

Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Bhushan is a seasoned crypto writer with over eight years of experience spanning more than 10,000 contributions across multiple platforms like CoinGape, CoinSpeaker, Bitcoinist, Crypto News Flash, and others. Being a Fintech enthusiast, he loves reporting across Crypto, Blockchain, DeFi, Global Macros with a keen understanding in financial markets. 

He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills. Bhushan has a bachelors degree in electronics engineering, however, his interest in finance and economics drives him to crypto and blockchain.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.