Goldman Sachs warns of $80 billion stock sell-off pressure: Increased risks for Bitcoin, gold, and silver

The global financial market may be entering a new period of volatility after Goldman Sachs issued a warning that systematic funds could sell off tens of billions of USD worth of stocks in the coming weeks.

This wave of selling could spill over into other assets such as Bitcoin, gold, and silver as liquidity conditions continue to deteriorate.

Goldman Sachs: Selling pressure from CTAs may increase as liquidity tightens

According to a report from Goldman Sachs’ trading division, trend-following funds, known as Commodity Trading Advisors (CTAs), have triggered a sell signal on the S&P 500 index. Notably, these funds are expected to remain net sellers in the short term, regardless of whether the market stabilizes or continues to decline sharply.

Goldman estimates that if the market weakens further, approximately $33 billion worth of stocks could be sold in just one week. In particular, the bank’s analysis models suggest that the sell-off could reach up to $80 billion in the next month if the S&P 500 continues to fall or breaks through key technical levels.

Currently, market conditions are very fragile. Goldman analysts note that liquidity has significantly decreased, while changes in options positioning strategies could increase price volatility.

Another factor adding to market instability is the “short gamma” position of market makers. In this state, they are forced to sell when prices fall and buy when prices rise, amplifying volatility and leading to sharp movements within the day.

Additionally, Goldman also points out that other systematic investment strategies, including risk-parity funds and volatility-control funds, still have room to reduce their investment exposure if volatility continues to rise. This indicates that selling pressure is not limited to CTAs alone.

Goldman Sachs Panic Index | Source: Goldman Sachs Investor sentiment is also showing signs of weakening. Goldman’s internal Panic Index recently approached levels typically associated with extreme stress. Meanwhile, retail investors, who have been actively buying during market dips over the past year, are now beginning to show signs of fatigue. Recent fund flow data indicates that the net selling trend is prevailing.

Spillover risks to Bitcoin and precious metals

Although Goldman’s analysis mainly focuses on the stock market, the potential impacts of this wave of selling could extend to other financial assets.

Historically, large sell-offs in the stock market combined with tightening liquidity often lead to increased volatility in assets sensitive to macroeconomic conditions, including cryptocurrencies.

Bitcoin, which tends to trade based on overall risk sentiment during liquidity crunches, could face more significant volatility if stock selling pressure intensifies. Cryptocurrencies and speculative trading assets favored by retail investors have also shown clear sensitivity to recent market swings, reflecting the vulnerable state of investment positions.

Furthermore, sharp volatility in the stock market could trigger complex cross-asset flows. While a “risk-off” sentiment typically puts pressure on commodities, precious metals like gold and silver may attract safe-haven demand amid rising uncertainty. This could lead to significant swings in both directions, depending on overall liquidity trends and the strength of the USD.

Gold, Bitcoin, and Silver Price Movements | Source: TradingView## Liquidity – The Decisive Factor

Currently, liquidity remains the most critical variable. With systematic funds reducing leverage, increasing volatility, and seasonal market weakening factors approaching, the market could continue to be unstable for the next few weeks.

If Goldman Sachs’ forecasts materialize, next month will pose a significant challenge for the stock market and could trigger spillover effects into Bitcoin and precious metals.