Goldman Sachs says we could see a Chinese-driven supercycle due to increased demand and tight supply. Despite the success of Bitcoin and gold in the banking crisis, Goldman Sachs experts say the real rally will be in this market.
Goldman Sachs expects “super cycle” in this market instead of Bitcoin
Jeff Currie, head of commodities at Goldman Sachs, said they expect a ‘commodity supercycle’ driven by capital outflows from energy markets in China and this month’s banking crisis. Speaking at the Financial Times Commodities Global Summit, Currie talks about a cycle that will bring significant cash flow to commodities:
As losses (caused by the banking crisis) increased, they also spread to commodities. Historically, when these types of injury events happen, it takes months for capital to come back… There will still be a supply gap until June, which will push up oil prices. In general, we think that we, as Goldman Sachs, will experience a super cycle for commodities. This cycle can be started by China.
Commodities are a form of investment that involves buying and selling various natural resources or products. According to Goldman Sachs’ expectation, the current banking crisis will provide a serious influx of money into commodities. Most experts think that the Fed rate decision, which will be announced on Wednesday, March 22, may be a step towards cooling this crisis.
Silicon Valley Bank crisis has been an opportunity for Bitcoin
As the banking crisis followed the traditional world of stocks and bonds, Bitcoin suddenly began to look like a safe haven. Similarly, gold surpassed the $2,000 ATH level in turbulent market conditions. Bitcoin is up over 2% this month, while a volatile S&P 500 has gained 1.4% and gold 8%.
“If you’re going to describe an environment of repeated bank attacks as central banks try to fight inflation with rapid rate hikes, that’s pretty close to the thesis for owning Bitcoin, as you’ve heard so far,” said Stephane Ouellette, CEO of FRNT Financial.
Crypto watchers say the collapse of Silicon Valley Bank (SVB) is a boon for Bitcoin (BTC). Researcher Nik Bhatia and market analyst Joe Consorti said in current analysis, “Silicon Valley Bank, the 18th largest bank in the country, collapsed yesterday. “However, we are learning how record sales in US Treasury bonds last year resulted in billions of dollars’ worth of unrealized losses in the banking industry.”
How did SVB crash?
The crisis in the SVB began in early March after the startup bank sold a portfolio of predominantly US Treasury or government securities at a loss and announced a share sale to bolster its balance sheet. Prices of Treasury bills have fallen over the past year thanks to the Fed’s aggressive rate hike campaign to contain inflation.
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