Goldman Sachs: "The selloff in U.S. equities isn’t over yet… volatility likely to persist for a while"

Volatility in U.S. equities could persist for some time, a new outlook suggests.

According to Walter Bloomberg on the 8th (local time), Goldman Sachs warned in a recent report that "CTA (Commodity Trading Advisor) flows that use trend-following strategies may sell additional U.S. stocks again this week."

With a sell signal already triggered in the S&P 500, the report said CTA funds could sell as much as $33 billion this week and up to $80 billion over the next month if market conditions deteriorate further. It added that some selling may be unavoidable even if the index moves sideways or rebounds.

The report noted that "market stress remains elevated, and in a thin-liquidity environment, short-gamma positions in the options market could amplify price volatility." It added that other systematic trading flows—such as risk-parity strategies and volatility-control funds—may also have room to cut exposure if volatility persists.

Goldman Sachs also said that with seasonal tailwinds weak and retail investor fatigue building, the likelihood is high that unstable conditions in financial markets will continue for the time being.

Meanwhile, this environment could also weigh on the digital asset (cryptocurrency) market. If the U.S. equity correction deepens, risk appetite across broader risk assets could deteriorate, increasing the likelihood that Bitcoin (BTC) and the altcoin market will be shaken in tandem.