Bitcoin's Slump Could Continue as Goldman Sees Several More Quarters of Dollar Strength

A peak in the U.S. dollar "feels several quarters away," said Goldman Sachs strategist Kamakshya Trivedi in a note the bank's clients.

"We do not expect the Fed to embark on easing until 2024, and a trough in growth also seems months away," he wrote. Checking the experience of the 1970s – like now a period of high inflation – Trivedi noted the dollar didn't begin to weaken until economic activity was declining and the U.S. central bank loosened policy.

That could be bad news for bitcoin (BTC). Among any number of reasons for the crypto's brutal bear market of the past year, high on the list is the strong dollar. Bottoming in the middle of 2021 at just under the 90 level, the greenback has shot higher to its current level of 113.69 – the strongest read since early 2002.

Trivedi does offer some hope for dollar bears (and bitcoin bulls), suggesting it's possible the European economy strengthens from here, new leadership at the Bank of Japan (BOJ) could be more hawkish, and China may back off its zero-Covid policies – all of which might tend to put pressure on the U.S. dollar. "But," he cautions, "we are not there yet."

Indeed, the dollar is sharply higher again on Friday morning, helping to send bitcoin back down below $19,000 to $18,750.