Goldman Sachs has warned that bitcoin has developed an increased vulnerability to the Federal Reserve hiking interest rates. Analysts at the global investment bank the popular crypto’s mass adoption has intensified its vulnerability. They said that over the last two years, as BTC has become more widely adopted, its correlation was macro assets has increased significantly.
Goldman Sachs believes the crypto assets will not be immune to macroeconomic forces. This includes the monetary tightening of the central bank. Analysts highlighted that the Fed is expected to raise the interest rates fivefold this year. It’s likely that the Fed Reserve will raise interest rates at every meeting. However, the Federal Open Market Committee (FOMC)’s post-meeting statement, last week, did not give a specific time frame for the increase. But there are indications that it could be soon.
The FOMC in its latest statement said they will continue to reduce the monthly pace of its net asset purchases and bring them to an end in early March. The Committee will increase its holdings of Treasury securities, beginning in February, by at least $20 billion per month. It will also boost agency mortgage-backed securities by at least $10 billion per month. The Committed highlighted that it would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of its goals.
UBS, Switzerland’s largest bank also warned of a crypto winter as the market is rift with Fed’s plans to raise rates and regulations. The crypto market has been struggling to recover from the price crash. There have been more losses than gains.