Goldman's Bullish Dollar Forecast Could Spell More Bad News for Bitcoin

A peak in the U.S. dollar "feels several quarters away," Goldman Sachs strategist Kamakshya Trivedi wrote 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 – which was also a period of high inflation – Trivedi noted the dollar didn't begin to weaken until economic activity was declining and the Federal Reserve loosened its monetary policy.

That could be bad news for bitcoin (BTC). Among any number of reasons for the crypto's 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 U.S. dollar index has shot higher to its current level of 113.69 – the strongest reading since early 2002.

Trivedi did offer some hope for dollar bears (and bitcoin bulls), suggesting it's possible the European economy strengthens, new leadership at the Bank of Japan could be more hawkish and China may back off its policy of zero tolerance for COVID-19 – all of which might tend to put pressure on the U.S. dollar, although he said, "We are not there yet."

The dollar was sharply higher again on Friday morning, and bitcoin fell below $19,000 to $18,750.