Peter Brandt, a renowned veteran trader and CEO of a trading company owned by Factor LLC, recently shared his thoughts on Goldman Sachs, which will likely start from the desktop of the cryptocurrency.
On December 21, 2017, a similar Bloomberg article stated that Goldman Sachs will establish cryptocurrency trading, although the bank is “still trying to solve security problems.”
Although the Brandt diagram seems significant, it should be understood that this kind of speculation has been going on for two months now. The Wall Street Journal already reported Goldman Sachs’ intention to do so on October 2, 2017.
While we ignore the exact date, it looks like Goldman Sachs has ditched its plans to launch the Bitcoin Trading Desk (BTC). But most importantly, there is not much in common in terms of structure between the 2017 Bull Terrier and the current market.
The market capitalization of Bitcoin at the end of 2017 is $ 1 billion. Source: TradingView
Notice how the BTC volume increased from an average daily volume of $ 2 billion in November 2017 to $ 14.6 billion at the end of the year, i.e. seven times. The inbound retail trade was so impressive that it caused Binance, Bitfinex, and Bittrex to temporarily reject new users.
Binance accounts were sold by users directly to other users at a time when new registrations were not accepted. In other words, there is currently no Bitcoin retail craze like the one that happened at the end of 2017. In fact, the current rally appears to be driven by organizations that seem to be grabbing BTC with every drop.
Meanwhile, the average trading volume of $ 66 billion on February 22, 2021, when Bitcoin’s market cap peaked at $ 1.09 trillion, has remained relatively stable over the past six weeks.
Therefore, a seasoned technical analyst like Brandt should make the caveat that volume is the most important indicator of market participation (which he often emphasizes in his second analysis).
To see this difference forever, you need to understand the basics of the futures markets. Derivative exchanges require commissions on perpetual futures (buyers) or short positions (sellers) every eight hours to maintain balanced exposure. This metric, known as the funding rate, will be positive when there is an aspiration that requires more impact.
As you can see from the chart above, buyers were willing to pay up to 40% per week to capitalize on their long positions. This is completely untenable and is a sign of extreme optimism. Any pullback in the market could trigger consecutive liquidations, with the BTC price starting to fall.
These exorbitant interest rates no longer exist, although the current weekly funding rate of 4% was the highest since June 2019. However, the size numbers are less than retail-driven over-long climb fads.
Finally, keep in mind that CME and CBOE futures contracts were launched in December 2017. As Cointelegraph recently told Cointelegraph, “This unique event could have a major impact on the Bitcoin economy.” Turning back, it seemed to be the signal for the highest ecstasy that the bears were waiting for. Consequently, Goldman Sachs’ satisfaction could have been an effect, not a cause.
But while Brandt rose to prominence in the cryptocurrency space for anticipating an 80% + correction after Bitcoin’s peak in 2017, his track record has been less impressive lately.
To summarize, there is no evidence to support Peter Brandt’s theory, other than one incident that happened once in 11 years of bitcoin trading. Not to mention, rumors about trading the Goldman Sachs cryptocurrency have been circulating for quite some time.