Goldman Sachs said Thursday that traders might be premature in betting the U.S. Federal Reserve will move quickly to unwind the past year’s unprecedented monetary stimulus.

The investment banking giant’s comments could offer relief to bitcoin bulls, some of whom argue that trillions of dollars in money printing by central banks raises the chances of inflation, bolstering the cryptocurrency’s use as an investment hedge.

“The earliest the Fed will start talking about tapering [of bond purchases] is late 2021, with any discussion of interest rate hikes only coming a year after that,” Goldman Sachs’ Andrew Tilton told CNBC

The market for futures contracts used to bet on Federal Reserve funds now implies the first interest-rate hike could come as soon as 2022, versus the 2024 liftoff implied about four weeks ago. What’s more, the futures are now pricing multiple rate hikes in 2023. 

“That feels aggressive to us,” Tilton said, adding that the Fed hasn’t even begun tapering its ongoing $120 billion-a-month in bond purchases, a supplemental form of monetary easing once interest rates are cut close to zero, as they were early last year when the coronavirus pandemic hit.

The Fed said earlier this year it’s committed to continue buying $120 billion worth of bonds per month until it sees “substantial further progress” in the recovery. The bank has also reiterated that interest rates would remain at record lows for some time after inflation rises above the central bank’s 2% target. 

A tapering or rate hike could dilute bitcoin’s appeal as an inflation hedge, inviting some selling pressure from momentum funds that bought the cryptocurrency as a store-of-value asset. 

The cryptocurrency fell by 20% last week, the biggest single-week decline since March 2020, as U.S. Treasury bond yields rose, indicating markets were pricing in prospects of an early Fed tightening. 

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