After the recent sharp decline in Bitcoin prices, the analysis published by the US-based investment bank Goldman Sachs brought the discussions of bottom formation in the market back to the agenda. While the bank’s assessment points out that current price levels are similar to past cycles, it also takes a cautious approach to the direction of the market.
The rate of decline is similar to past cycles
Goldman Sachs analyst James Yaro stated in his report that the decline in Bitcoin and crypto assets in this cycle approached the average decline range between the peak and the bottom seen in previous periods. This assessment is interpreted as a sign that price movements may coincide with historical trends.
Bitcoin is trading around $66,000, down nearly 40 percent from its peak reached in October last year. This withdrawal is considered as a result of the sales wave that accelerated due to the decrease in investors’ risk appetite and macroeconomic uncertainties.
Goldman Sachs was founded in 1869 and is known as a well-established financial institution that provides investment banking, asset management and financial consultancy services on a global scale. The bank has become more visible in recent years with its analysis of crypto asset markets.
Trading volume decline continues to pose risks
Although Yaro pointed out that a bottom may have been formed in terms of price, he emphasized that the weakness in transaction volume should be monitored carefully. It is stated that if the decline in volume continues, there may be pressure on revenues throughout the sector.
The crypto asset market may have reached a bottom in terms of price, but trading volume may drop further. If weak volume continues, the revenues of companies operating in the sector may remain under pressure in the coming period.
According to the analyst, price volatility tends to increase during periods of low trading volume. This situation may limit the permanence of the movement and create a fragile structure in the market, even if there is a possible rise.
On the other hand, Goldman Sachs maintained its “buy” recommendation for large crypto-related companies such as Coinbase and Robinhood with its rating. This approach reveals that the bank maintains its positive expectations for the potential of the sector in the long term.
Market participants are trying to determine a clearer direction by monitoring both price levels and the trend in transaction volume. The current outlook highlights a cautious stance in the short term.
