Goldman Sachs has issued a warning to Bitcoin investors, stating that the highly anticipated Bitcoin halving may not result in the expected returns. The bank highlights that previous bullish trends were not solely driven by the halving but were influenced by other macro factors as well.
As the Bitcoin halving is just two days away, the cryptocurrency community is hopeful that history will repeat itself. In the past, following the halving, Bitcoin has experienced significant rallies that led to new all-time highs.
Historical data shows that the previous three halvings resulted in returns of 93x, 30x, and 8x in the last three cycles. However, there is concern that the upcoming cycle may offer returns lower than 8x, as this return has been decreasing.
Experts argue that the increasing prices and price stability have led to more moderate returns. However, there has been a peak in adoption and demand for Bitcoin in recent months, primarily driven by Bitcoin spot ETFs.
In a note to clients, Goldman Sachs’ Fixed Income, Currencies, and Commodities team warns against extrapolating past cycles and the impact of the halving, given the prevailing macro conditions. They caution that the upcoming event may turn out to be a “buy the rumor, sell the news” situation. However, they also acknowledge that BTC price performance will continue to be driven by the supply-demand dynamic and demand for BTC ETFs.
One significant macroeconomic factor to consider is the high inflation and high-interest rate climate. In the past, U.S. investors have had a high appetite for risk, but the current conditions are different. It is expected that U.S. interest rates, which are currently the highest globally, will remain high in 2024 due to stubborn inflation and a strong economy.
Taking trends into account, the inflow of funds into recently launched ETFs could play a crucial role in Bitcoin’s price trajectory after the halving. Prices have shown a correlation with inflows, reaching an all-time high of nearly $74,000. Bloomberg data reveals that 11 spot ETFs have accumulated $59.2 billion in assets under management, indicating unprecedented demand. If inflows continue to be high, it is highly likely that prices will continue to rise.
As of now, BTC is trading at $62,700, experiencing a 2% rebound after a temporary dip below $60,000. Analysts suggest that Bitcoin’s price slump may be coming to an end, as traders have sold off most of their profitable holdings, potentially reducing the downward pressure on the price. There is anticipation of a supply shock after the halving, with bulls expecting Bitcoin to stage a massive rebound and reach $80,000.
In conclusion, Goldman Sachs warns that the Bitcoin halving may not deliver the expected returns, and previous bullish trends were influenced by other macro factors. However, the demand for Bitcoin spot ETFs and the supply-demand dynamic will continue to drive Bitcoin’s price. Additionally, the high inflation and high-interest rate climate should be taken into account when considering Bitcoin’s future performance.