Melt-up or peak? Bitcoin falls below $110,000 as Goldman Sachs traders reveal the tug-of-war between macro and technical factors

Goldman Sachs trader Paolo Schiavone has warned that Monday’s bitcoin flash crash is the first signal of an impending market shift, marking a potential cooling off after three weeks of risk asset frenzy.

On September 26, Goldman Sachs trader and strategist Paolo Schiavone posted that over the past three weeks, risk assets have experienced an absolute sprint, with momentum trading yielding significant returns, but the pace is now changing.

This Monday, bitcoin’s sudden flash crash was seen by traders as “the first real signal”—the market’s rhythm is slowing down, and a “deceleration” is needed in the short term.

The cryptocurrency market suffered a sharp drop on Monday, with $1.7 billion in long positions liquidated instantly. Bitcoin, Ethereum, and almost all major cryptocurrencies were hit. On Thursday, bitcoin continued to fall, breaking below the $110,000 mark and currently trading near $109,000.

He believes that although the basic situation is a manifestation of the “month-end effect,” some key trends in the market are starting to look overextended. For example: the macro environment remains highly volatile; consensus trades (shorting the US dollar, steepening the yield curve) are under significant pressure.

Despite short-term correction risks, this trader’s fundamental judgment is that the market is heading toward a “melt-up” rally. He believes that pullbacks in risk assets will be met with buying, due to factors such as tariffs having peaked, fiscal stimulus being brought forward significantly, financial conditions easing, rate cuts approaching, and the real impact of AI.

Bitcoin Technical Signals Draw Attention

Paolo Schiavone elaborated on the current shift in market conditions.

He stated that the market has experienced an “absolute sprint” over the past three weeks, with momentum trading delivering clear returns. However, things are now changing.

Monday’s bitcoin flash crash is the first sign of a market shift, occurring in an environment where bitcoin is leading rather than lagging—bitcoin is taking the lead instead of following other assets.

Schiavone specifically mentioned that the $110,000 level has become a key technical support for bitcoin, saying, “Nothing good happens below the 200-day moving average.”

He believes this level is more likely to act as support rather than resistance, indicating that bitcoin’s structural significance has surpassed that of crypto assets themselves, becoming a symbol of overall risk appetite.

Macro Situation “Volatile,” Consensus Trades Under Pressure

Although he views the current market weakness as a manifestation of the “month-end effect,” he also acknowledges that some trends in the market have become “clearly overextended.”

For example, mainstream consensus trades such as “shorting the US dollar” and “going long on yield curve steepening” are experiencing continued stop-losses, and the macro situation remains “highly volatile.”

Paolo Schiavone pointed out that in a market environment dominated by technical levels and stop-loss behavior, bitcoin’s sharp volatility may still be a prelude to macro risks.

The article states that when he surveyed his client base, he found that opinions on whether greater risk lies in growth or inflation were evenly split 50/50. This reflects a deep divide in the market’s outlook for the economy.

He specifically noted that the market remains highly divided on future risks of growth versus inflation, “50% of clients worry about inflation, 50% worry about growth.” This itself is a signal of the market’s lack of direction.

For the US economy before the end of the year, the trader estimates GDP growth at 2%, core PCE at 3%, and unemployment rate reaching 4.5%. The key question is whether restrictive policy rates are needed, or if rates should be below neutral. He believes the terminal rate may be close to 2.5%.

In the bond market, he stated, “I have always been pessimistic about fiscal conditions, but it is now hard to agree with the so-called ‘fiscal dominance’ narrative.” He added that by 2025, the 30-year US Treasury yield may settle in the 4.25–4.5% range.

“Melt-up” Logic Chain Forms, Technicals Flash Warning Signals

The trader has constructed a complete logic chain supporting the market’s move toward a “melt-up.”

First, the impact of tariffs has peaked, providing a relatively stable policy environment for risk assets.

Second, fiscal stimulus measures will be significantly brought forward, providing momentum for economic growth.

At the same time, financial conditions are easing, supporting market liquidity.

The Federal Reserve’s rate-cutting cycle is about to begin. The trader maintains his forecast of “three insurance rate cuts,” and if non-farm payroll data continues to be revised downward, a 50 basis point cut could even happen in October.

The real impact of AI also supports the long-term growth outlook.

He believes that the combination of these factors suggests that any pullback in risk assets will be met with buying.

Although the fundamentals support the “melt-up” logic, as a technical analyst, Paolo Schiavone still notices some warning signals. Nvidia has failed to effectively break through its highs, the Nasdaq has formed a failed head-and-shoulders pattern, and is brewing an “expanding top.”

The trader emphasized, “Tops don’t ring a bell—they are just an accumulation of signals. Bottoms are events, tops are processes.”