Goldman Sachs: ETH may soon grow to high levels
Goldman Sachs sharply enters the virtual currency industry, in a note from Global Markets CEO Bernhard Rzymelka, the bank shows that cryptoassets have been trading in line with US inflation data since 2019. Bloomberg Galaxy Crypto Index (red) on a log axis, versus USD 2-year inflation swap 2-year (blue) 
In fact, given that we are talking about two-year swaps, it would be more correct to talk about inflationary expectations, that is, what the market expects inflation to be in the next two years. While the correlation may not be causation, the graph above is clear enough to indicate that inflation is certainly a driving force behind the growth of virtual currencies. In which it means that those who are denigrating virtual currencies are also those who, in the end, work for their growth.
If the medium-term forecasts based on the inflationary model were true, with the current inflationary pressures persisting, we could soon see a break to the upside in the universe of cryptocurrencies and in particular in a token.
As the Goldman strategist writes, the environment seems favorable for Ethereum as it “has followed the inflation markets particularly closely, probably reflecting the pro-cyclical nature as a“ network-based ”asset. And, as Rzymelka observes, "the latest spike in inflation suggests an upside risk if the main relationship of the last few episodes were to hold up"
This, according to Goldman, aligns well with the Ethereum chart. In recent days, the price of the cryptocurrency has reached new all-time highs, climbing just under $ 4,500 with an ever-tighter wedge, which for Goldman is "either a sign of exhaustion and a spike … or a starting point for a rally. accelerating on a break higher. " For Goldman, the answer to this rhetorical question is easy and the bank suggests that Ethereum could rise up to $ 8,000 in the next two months if the historical correlation with inflation continues ”.
The risk, however, is linked to inflationary expectations and these must be constant and permanent over time, so this development could depend on stable inflation high around 2.5%, and this is not necessarily certain.
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The Goldman Sachs article : ETH could soon grow to high levels comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/goldman-sachs-eth-potrebbe-presto-crescere-a-livelli-elevati/ on Mon, 01 Nov 2021 07:00:58 +0000.