Banking Giant Goldman Sachs Expects Bitcoin to Touch $100K Despite Major Correction
Post the Fed commentary earlier this week suggesting the tightening of its monetary policy sooner, the equity and crypto markets have come under severe pressure. Late Thursday, January 5, the Bitcoin price tanked under $42,000 hitting a three-month low on the chart.
The latest price crash shows that Bitcoin has corrected by a staggering 40% since its all-time high of $69,000 in November 2021. However, big institutions continue to remain bullish on Bitcoin’s long-term prospects. Just before the Fed commentary on Wednesday, Wall Street banking giant Goldman Sachs said that it expects bitcoin to continue eating into Gold’s market share and thus hit the $100K levels.
However, Goldman has taken a long-term five-year approach to see Bitcoin at those levels. In a note to investors on Tuesday, Goldman Sachs’ co-head of foreign exchange strategy Zach Pandl said: “Hypothetically, if Bitcoin’s share of the ‘store of value’ market were to rise to 50% over the next five years (with no growth in overall demand for stores of value) its price would increase to just over $100,000, for a compound annualized return of 17-18% (accounting for growth in Bitcoin supply over time)”.
Not Goldman alone, but many analysts expect Bitcoin to touch $100K levels sooner, even in 2022. Bloomberg’s commodity strategy analyst Mike McGlone believes that the Fed turning hawkish on its monetary policy will rather benefit Bitcoin. Mr. McGlone also believes that Bitcoin can outperform the stock market this year.
“Expectations for Federal Reserve rate hikes in 2022 may support a win-win scenario for Bitcoin vs. the stock market. Stretched markets have become common, but commodities and Bitcoin appear to be early reversion leaders. It’s a question of bull-market duration, and we see the benchmark crypto coming out ahead,” he said.
Well, while everyone has been talking about the Bitcoin bull case scenario, one must wonder what is the bottom with this dovish performance. Bitcoin could find two major support levels at $40,000 and the next at $38,000.
It means the Bitcoin bottom is quite near and this could be a good time for accumulation for the retail investors. Speaking to CNBc, Galaxy Digital founder and veteran crypto investor Mike Novogratz said that institutions are preparing to scoop the bottom at $38,000. He added:
"I know big institutions who are going through their process to put positions on and so I think they're gonna see those as attractive levels to buy. On the charts, $38 [thousand], $40 [thousand] feels like where we should bottom."