Goldman Sachs Reveals SP500 Prediction: How Will Bitcoin Be Affected?

• Goldman Sachs Group Inc. strategists have revised their 2024 targets for the S&P 500 Index after the index surpassed the significant 5,000 milestone earlier this month.
• Kostin predicts that the S&P 500 will reach 5,200 by the end of the year, reflecting a 2% increase from the mid-December estimate of 5,100.
• As long as the BTC price remains above the key support level of $52,000, derivative data suggests further bullish action.

Goldman Sachs Updates Year-End Expectations for S&P 500: How Will Bitcoin Be Affected?

Goldman Sachs Detailed Its Predictions for the S&P 500

In recent days, the price of Bitcoin (BTC) hovering around $52,000 has made investors uneasy. Meanwhile, U.S. stock markets are on the rise, with the S&P 500 index reaching record levels at the 5,000 mark. Since the beginning of the year, the index has gained 5.54%, indicating strong performance.

In a quick turnaround, strategists at Goldman Sachs Group Inc. revised their 2024 targets for the S&P 500 Index after the index surpassed the significant 5,000 milestone earlier this month. The team, led by David Kostin, highlighted in a recent note sent to clients that increased profit forecasts were the main driving force behind this adjustment.

Kostin predicts that the S&P 500 will reach 5,200 by the end of the year, reflecting a 2% increase from the mid-December estimate of 5,100. This new target represents a 3.9% gain from the closing price on Friday.

While Kostin’s initial estimate for November 2023 was that the S&P 500 would reach 4,700 by the end of this year, setting a $5,200 target for the S&P 500 in 2024 makes Goldman Sachs one of the most optimistic on Wall Street. Other market analysts, such as Tom Lee from Fundstrat Global Advisors and John Stoltzfus, Chief Investment Strategist at Oppenheimer Asset Management, have shared a similar year-end outlook.

How Will Bitcoin (BTC) Price Respond?

Bitcoin and the S&P 500 have maintained a close and symbiotic relationship in the past. After a strong rally in the last quarter of 2023, Bitcoin’s price largely caught up with it.

As long as the BTC price remains above the key support level of $52,000, derivative data suggests further bullish action. The chart below shows a significant increase in Bitcoin open interest, reaching a notable $22.5 billion on February 18, indicating a significant $1.12 billion increase compared to the previous closing balance on February 16.

Notably, the figure has consistently stayed above the $20 billion threshold for three consecutive trading days, indicating the sustained bullish sentiment among investors.

This development, although Bitcoin ETF trading concluded on Friday, confirms that speculative traders are strengthening their positions, reconfirming market confidence and expecting further upward momentum in BTC price in the coming days.

Additionally, it is important to note that the last time Bitcoin open positions exceeded the $22.5 billion level was in April 2021 when Bitcoin traded above $60,300.

Potential Downside

The historical accumulation trend poses a significant hurdle for BTC as it encounters strong resistance at $53,200. Analysis from on-chain data by IntoTheBlock indicates that 532,050 addresses are securing 294,890 BTC at the peak price of $53,256.

It is important to note that many of these investors have been waiting at a loss since December 2021. As BTC approaches the cost price, there is a likelihood of closing positions.

However, if bulls manage to break through the $53,000 selling wall, it could initiate a strong bullish momentum and potentially reopen the path to test the $60,000 region.