Stocks and crypto are too perfect – Goldman Sachs warns of vulnerability and market correction

Goldman Sachs issued a bleak warning on Thursday, cautioning that the stock market’s strong rally might not endure. Strategist Peter Oppenheimer noted in a client memo that equities are currently “priced for perfection,” leaving them vulnerable to a correction as bond yields rise and economic uncertainties loom.

“While we expect equity markets to make further progress over the year as a whole — largely driven by earnings — they are increasingly vulnerable to a correction,” Oppenheimer stated. He highlighted factors such as disappointing economic data and elevated valuations as potential triggers for a downturn.

Though he stopped short of predicting an immediate 10% correction, Oppenheimer suggested that investors might consider reducing risk in their portfolios.

The Trump factor and market volatility

Donald Trump’s presidential victory boosted equity markets significantly, outperforming historical post-election rallies, including those following Ronald Reagan’s 1980 win. Yet, analysts warn that the very factors driving this optimism could spark turbulence.

Wedbush analyst Dan Ives pointed to recent sell-offs in major stocks such as Nvidia (NVDA), Tesla (TSLA), and Palantir (PLTR), attributing these to rising interest rates and profit-taking.

Nvidia, a market darling, saw its worst trading day since September after CEO Jensen Huang’s keynote failed to meet heightened expectations. Tesla and Palantir have also experienced sharp corrections, each losing more than 10% in recent weeks.

Also, Goldman Sachs research emphasized the difficulty of maintaining high sales and profit margins over extended periods, a challenge compounded by competition from other assets, including cryptocurrencies. The company believes that as stocks face stiff resistance, the stage may be set for investor disappointment.

Crypto markets set for a rollercoaster 2025

Meanwhile, Arthur Hayes, co-founder of BitMEX and CIO at Maelstrom, predicts a dramatic crypto market correction after peaks in early 2025. In his latest Medium insight, Hayes forecasted a significant downturn following a liquidity-driven rally, estimating a mid-March peak.

Hayes cited US dollar liquidity dynamics and quantitative tightening as determining factors influencing the market. “Currently, Bitcoin is fluctuating, according to changes in the speed of dollar supply,” he said.

Despite earlier concerns about a “Trump dump,” Hayes believes this correction may have already occurred in late 2024. He now expects a liquidity surge of up to $612 billion in Q1 2025, driven by US Treasury spending and reduced activity in the Federal Reserve’s Reverse Repo Facility. This influx, he argued, could sustain bullish momentum in the crypto market.

Hayes also disclosed investment moves from his family office, Maelstrom, into decentralized science (DeSci) tokens, including BIO, VITA, and NEURON. He is advising investors to take a more risk-tolerant approach for short-term gains.

Kiyosaki warns of historic stock market crash

Robert Kiyosaki, the author of Rich Dad Poor Dad, echoed Goldman Sachs’ sentiments, warning of an imminent stock market crash. He attributed this outlook to the long-term repercussions of decisions made during the 2008 financial crisis, such as prioritizing bank bailouts over citizen welfare.

“I WARNED Y’all. In 2013, I published Rich Dad’s Prophecy, which predicted the biggest stock market crash in history. That CRASH is NOW,” Kiyosaki declared on social media.

I WARNED Y’all. 2013 Published Rich Dad’s PROPHECY.
Prophecy predicted the biggest stock market crash in history was coming. That CRASH is NOW.

How did I know this giant crash was coming? I knew because in 2008 our leaders, led by Fed Chairman Ben Bernanke, paid himself and…

— Robert Kiyosaki (@theRealKiyosaki) January 8, 2025

Despite his pessimistic predictions, Kiyosaki expressed his delight about investment opportunities in the downturn, particularly in Bitcoin. “BITCOIN crashing. Great news. I continue buying Bitcoin because Bitcoin crashing means Bitcoin is on sale,” he wrote.

A Step-By-Step System To Launching Your Web3 Career and Landing High-Paying Crypto Jobs in 90 Days.