Goldman Sachs Pulls Short Dollar Trade: Report

Key Takeaways

  • Goldman Sachs is closing its recommended short dollar trade, citing rising Treasury yields.
  • Long BTC, short USD have been among the world’s most crowded trades in recent months.
  • Goldman said Europe effectively curtailing the COVID-19 pandemic may spark further opportunities to profit from the short dollar trade.

The short dollar trade has run its course, says Goldman Sachs. 

Goldman Sachs Closes Short Dollar Call 

Goldman Sachs is pulling out of its short dollar trade, Bloomberg reported today. 

The investment bank published a note titled “tactical retreat” Friday, confirming it had closed a short position on the U.S. dollar against a basket of G10 currencies. A group of strategists on Goldman’s currency team pointed to rising yields as a reason for the change in stance. Zach Pandl said: 

“Although we still expect these currencies to appreciate versus the dollar over the coming quarters, firm U.S. growth and rising bond yields may keep the greenback supported over the short-term”

Goldman Sachs isn’t the only big player to close its short dollar position in recent weeks. Several hedge funds have pulled the same move as Treasury yields see an 80 basis point surge. 



Goldman Sachs called its dollar short on Oct. 9, predicting what would become one of the world’s most crowded trades by the end of the year. Around the same period, global markets turned long Bitcoin as it broke a key resistance level at $20,000. A Bank of America survey indicated that both calls were among the market’s most popular trades at the time. 

Bitcoiners are widely known for being “short” on the dollar. Many view the leading crypto as a hedge against inflation, as it offers a level of scarcity that central bank-run currencies lack. There will only ever be 21 million Bitcoin, which is what’s helped the asset establish a popular “digital gold” narrative. By contrast, the Federal Reserve has printed trillions of dollars in the last year alone. The U.S. national debt just surpassed $28 trillion. 

Goldman Sachs’ change in stance arguably weakens the long Bitcoin trade because crypto is generally seen as an alternative to the traditional finance system. The U.S. dollar is the world’s reserve currency, but that could change if crypto assets like Bitcoin and Ethereum see mass adoption. 


Their call might not last, though; in the same report, the strategists said that a gain in the Euro could rekindle opportunities to short the dollar. That scenario would depend on Europe’s Coronavirus recovery. 

“Clear evidence that Europe’s Covid situation is getting under control would likely warrant fresh dollar short recommendations,” they wrote.

Disclosure: At the time of writing, the author of this feature owned ETH and several other cryptocurrencies. 

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