Goldman Sachs Latest Report Gives a Bad Signal for Bitcoin!

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But all traders agree that the Fed must stop monetary tightening in order to cover losses in 2021.

Bitcoin, which continues its correlation with the US stock markets and reacts to the incoming data similarly to technology stocks, continues to be affected by the monetary policy of the FED and high inflation in the USA.

One of the bond products with which Bitcoin is inversely correlated is the US inflation indexed bond yields (TIPS).

What are TIPS?

It is a type of security issued by the US government and is aimed at protecting investors against inflation. In the US, as inflation rises, TIPS rises to maintain its true value. It can also be defined as Treasury bills indexed to an inflation indicator.

Relationship Between Bitcoin and TIPS

In the chart below, bitcoin price and TIPS We see the inverse correlation between the returns. Although the correlation decreased after June, it is still at -0.65.

Goldman Sachs in its latest report on TIPS stated that they maintain their expectations that the rise will continue.

Goldman analysts stated that by the end of the year, TIPS may rise to the range of 1.25%-1.50% and remain flat here. It is currently trading above TIPS 2018 peaks and around 1%.

When we pay attention to the above inverse correlation, Goldman Sachs’ latest report has been interpreted as the exit from risky assets such as Bitcoin may continue until the end of the year.

It is thought that this reverse correlation may reach its peak again with the end of the expectation after the Merge in Ethereum passed.