Goldman Sachs trader: Bitcoin's "Monday flash crash" is a "leading indicator"

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Goldman Sachs trader Paolo Schiavone has warned that Monday's Bitcoin flash crash is the first signal of an imminent market shift, marking a possible cooling down of the three-week risk asset frenzy.

On September 26, Goldman Sachs trader and strategist Paolo Schiavone wrote that, over the past three weeks, risk assets have experienced absolutely sprint-like gains, with momentum trades yielding clear returns, but now the pace is changing.

This Monday, Bitcoin suddenly flash crashed, which is “the first real signal” in the eyes of traders — the market’s pace is slowing down, and in the short term, a “deceleration” is needed.

The cryptocurrency market suffered a sudden plunge on Monday, with $1.7 billion worth of long positions forcibly liquidated almost instantly. Nearly all major cryptocurrencies, including Bitcoin and Ether, were hit. On Thursday, Bitcoin continued to fall, breaking below the $110,000 mark and is currently trading near $109,000.

He believes that although the main situation reflects an "end-of-month effect," some key market trends are starting to look excessively stretched. For example: The macro environment remains highly volatile; consensus trades (shorting the dollar, steepening the yield curve) are under immense pressure.

Despite the risk of short-term corrections, this trader's basic view is that the market is heading towards a round of "melt-up" trading. He believes that pullbacks in risk assets will be met with buying, because tariff impacts have peaked, fiscal stimulus will be greatly front-loaded, financial conditions are easing, rate cuts are imminent, and AI's real impact is being realized.

Bitcoin Technical Signals Draw Attention

Paolo Schiavone elaborated on the changes in current market conditions.

He noted that for the past three weeks, the market experienced a “full sprint,” and momentum trades delivered notable returns. However, conditions are now changing.

Monday’s Bitcoin flash crash is the first sign of the market turning, happening in an environment where Bitcoin is leading rather than lagging — that is, Bitcoin is now taking the lead rather than lagging other assets.

Schiavone specifically mentioned that the $110,000 vicinity has become an important technical support for Bitcoin, “No good things happen below the 200-day moving average.”

He believes this level is more likely to be support rather than resistance, indicating that Bitcoin's structural significance now goes beyond crypto assets themselves and has become a symbol of overall risk appetite.

Macro Environment "Volatile," Consensus Trades Under Pressure

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

For example, mainstream consensus trades such as “shorting the dollar” and “going long yield curve steepeners” are suffering continued stop losses, and the macro situation remains “very turbulent.”

Paolo Schiavone pointed out that in a market environment dominated by technical levels and stop-loss behaviors, violent swings in Bitcoin may still be a prelude to macro risks.

The article states that when he surveyed clients, there was an even 50/50 split in responses to whether greater risk came from growth or inflation. This reflects deep divisions in market views on the economic outlook.

He especially pointed out that risk judgments for future growth versus inflation remain highly divided: “50% of clients worry about inflation, 50% about growth.” That itself is a sign of a market lacking direction.

For the US economy before year-end, the trader estimates GDP growth at 2%, core PCE at 3%, and unemployment reaching 4.5%. The key issue is whether restrictive policy rates are needed, or rates below neutrality. He thinks the terminal rate may be near 2.5%.

On the bond market, he said, “I have always had a pessimistic view on the fiscal situation, but now it’s hard to buy into the so-called ‘fiscal dominance’ narrative.” He added that by 2025, the yield of 30-year US Treasuries could settle in the 4.25%–4.5% range.

"Melt-up" Logic Chain Forming, Technicals Flash Warning Signals

This trader has constructed a complete logical chain to support the market moving toward a “melt-up.”

First, tariff impacts have peaked, providing a relatively stable policy environment for risk assets.

Second, fiscal stimulus measures will be greatly front-loaded, providing impetus for economic growth.

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

The Federal Reserve's rate-cutting cycle is about to begin; the trader maintains a forecast of "three insurance cuts." If non-farm payroll data continues to be revised down, there may even be a 50bp rate cut in October.

AI’s real impact also supports the long-term growth outlook.

He believes that the combination of these factors implies any pullback in risk assets will be met by buyers.

Although fundamentals support the “melt-up” logic, as a technical trader, Paolo Schiavone still notes some warning signs. Nvidia hasn’t managed to decisively break previous highs, the Nasdaq has formed a failed head-and-shoulders top, and is brewing an “expanding top” pattern.

The trader emphasized, “No bell is rung at the top — it’s just the accumulation of signals. The bottom is an event, the top is a process.”

Risk Warning and DisclaimerThe market carries risks; investment needs to be cautious. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial situation, or needs of any individual user. Users should consider whether any opinions, viewpoints, or conclusions in this article suit their particular circumstances. Invest at your own risk. ```