Goldman Sachs Warns Bitcoin Increasingly Vulnerable to Fed Rate Hikes
In its latest research note, global investment bank Goldman Sachs warns that as Bitcoin becomes widely accepted, it also turns to be increasingly vulnerable to the interest rates hikes by the U.S. Federal Reserve.
The bank’s co-head of foreign exchange strategy, Zach Pandl, and FX analyst Isabella Rosenberg discuss the correlation of Bitcoin’s mainstream adoption and its vulnerability to Fed policy. They write:
“Over the last two years, as bitcoin has seen wider mainstream adoption, its correlation with macro assets has picked up.”
Reflecting on the recent weeks, where higher bond yields have affected technology stocks resulting in the Nasdaq 100 index tanking more than 13% for the year, the pair note:
“Bitcoin and other digital assets have likely suffered from the same forces … These assets will not be immune to macroeconomic forces, including central bank monetary tightening.”
The analysts also talk about the metaverse, of which their firm recently said that it could become a $12 trillion opportunity.
“Over time, further development of blockchain technology, including applications in the metaverse, may provide a secular tailwind to valuations for certain digital assets.”
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Source: igaming
