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Goldman Sachs Says Bear Market Unlikely

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Updated by Ali Martinez
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In Brief

  • Goldman Sachs sees a bear market as unlikely, citing a resilient private sector and potential Fed support.
  • Historical trends and longer business cycles reduce the risk of major downturns in the US stock market.
  • Bitcoin struggles with declining demand, with analysts predicting a potential drop below $40,000 in the short term.
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Goldman Sachs strategists have weighed in on the current state of the US stock market, predicting that a bear market—a decline of 20% or more—is unlikely.

Despite high valuations, mixed growth prospects, and lingering policy uncertainty, the team led by Christian Mueller-Glissmann highlights the strength of the private sector. It anticipates supportive moves from the Federal Reserve as key factors preventing a market plunge.

Bear Market Unlikely, But Crypto Doesn’t Look Good

Mueller-Glissmann’s analysis draws from historical trends. Since the 1990s, the frequency of significant downturns in the S&P 500 has decreased. This is due in part to longer business cycles, reduced macroeconomic volatility, and proactive interventions by central banks. These elements create a buffer that minimizes the risk of a deep bear market.

Additionally, Goldman Sachs expects the Federal Reserve to begin cutting interest rates, which could ease some pressure on the markets. While the stock market may still see a dip by year-end, the overall outlook remains cautiously optimistic.

The strategists maintain a neutral stance on asset allocation but carry a “mildly pro-risk” view for the next 12 months.

Fed Rate Cuts Targets
Fed Rate Cuts Targets. Source: CME FedWatch

Contrary to the stock market outlook, the cryptocurrency market is showing signs of a potential bear market. Julio Moreno, Lead Analyst at CryptoQuant, notes that Bitcoin is struggling due to declining demand.

“All valuation metrics are in bearish territory,” Moreno said.

Read more: Bitcoin (BTC) Price Prediction 2024/2025/2030

Bitcoin Market Cycle
Bitcoin Market Cycle. Source: CryptoQuant

Veteran trader Peter Brandt adds that there’s a 65% probability Bitcoin could drop below $40,000, though he remains optimistic about a long-term price surge, potentially reaching $130,000 by 2025.

“In early June I was assigning a 50% probability of $30,000 (approximately a 50% price decline) and a 50% chance of $140,000 (approximately a doubling of price). Since June my technical price indicators have been stacking up in favor of the $30,000 probability,” Brandt said.

In conclusion, while the US stock market appears resilient, the cryptocurrency sector may face headwinds as investors navigate uncertain economic waters.

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Ali Martinez
Ali Martinez is the Global Head of News at BeInCrypto, specializing in market analysis, emerging trends in the crypto industry, Bitcoin’s four-year cycle, and macroeconomic developments. Previously, he covered the altcoins market for Crypto Briefing, CryptoSlate, CCN.com, and NewsBTC. His reporting focused on the ICO boom, Ethereum's evolution, Bitcoin halvings, and network upgrades like hard forks and soft forks, emphasizing the impact on digital asset valuations. At Binance and FXStreet...
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