After numerous client requests, Goldman Sachs has reportedly started covering bitcoin. The firm released a report on Monday with a bearish outlook for the digital currency.
Also read: Hedge Funds Are Quietly Investing in Bitcoin
‘Due to Popular Demand’
Bitcoin.com recently reported on hedge funds quietly investing in bitcoin. An article by Zero Hedge on Monday confirms that hedge funds are actively trading the digital currency. In addition, fund managers that are clients of Goldman Sachs have also petitioned the firm’s chief technician Sheba Jafari to start covering it.
Goldman Sachs subsequently released a client report called “GS Techs: Quick BTC” on Monday, according to the publication. “Due to popular demand, it’s worth taking a quick look at bitcoin here,” Jafari wrote, adding that the firm’s overall outlook is:
Wary of a near-term top ahead of 3,134. Consider re-establishing bullish exposure between 2,330 and no lower than 1,915.
Goldman Sachs’ Technical Analysis
Goldman Sachs’ report explains how it came up with the bearish outlook using technical analysis, Zero Hedge detailed. The firm claims bitcoin’s extended target price for a 3rd of V-waves, using the ratio of 2.618, is $3,134, which was almost reached on Monday. “Both daily/weekly oscillators are diverging negatively. All of this to say that the balance of signals are looking broadly heavy,” the report reads.
Following the third wave, the firm then explained its view on what’s to come:
An eventual 4th wave should retrace at least 23.6% of the length of wave III, which in this case comes to ~2,330. It shouldn’t go much further than 38.2% down at 1,915. Expect 4th waves to trade sideways/messy for a period of time before eventually continuing the underlying trend.
Other More Bullish Predictions
Many people have recently offered their views on what they think the price of bitcoin will be. One of the most bullish in recent history is from Blockchain’s CEO Peter Smith, who is on the record for predicting:
A bitcoin might reach $500,000 by 2025.
Daniel Masters, the chairman of XBT Provider, early this month told CNBC that he expects bitcoin to reach $4,000 by the end of the year. “Bitcoin is emerging as the transactional layer of the internet, as programmable money and as digital gold. That’s the big picture,” he said.
At the end of February, BTCC CEO Bobby Lee tweeted his specific prediction. “Bitcoin price target in 2020 after block halving: USD $5k-$11k, assuming $5-$10 million daily flow into #BTC by then,” he wrote.
“There is a lot of fresh liquidity flowing into bitcoin, thanks to a surge in interest among investors in Asia, notably Japan and Korea, coupled with a resolution to the scaling debate,” Aurelien Menant, the CEO of bitcoin exchange Gatecoin, said in May. “I would not be surprised to see the bitcoin price doubling again to around $6,000 by the end of the year.”
Hedge funds are herd animals. If one starts pouring cash into bitcoin, others will follow; $5,000 within sight.
Do you think Goldman Sachs is too bearish on bitcoin? Let us know in the comments section below.
Images courtesy of Shutterstock, Goldman Sachs, NBC News, Zero Hedge
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