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Analysts Say the S&P 500 Is Oversold While Bitcoin Targets $22,000

2 mins
Updated by Michael Washburn
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In Brief

  • The S&P 500 is perceived as oversold, with the upcoming FOMC meeting anticipated to influence its trajectory significantly.
  • Bitcoin's recent price surge, attributed to rumors about Mt. Gox repayments' delay, positions it at a pivotal $22,000 target.
  • The global economic scene, marked by rising oil prices and potential inflation, adds layers of unpredictability to the markets.
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Analysts point to a stark dichotomy as the global financial environment teeters on the brink of significant shifts. The S&P 500 appears notably oversold, and Bitcoin consolidates with an impending target of $22,000.

The upcoming Federal Open Market Committee (FOMC) meeting looms large, promising to shape the narratives the S&P 500 and Bitcoin and challenge conventional wisdom.

The S&P 500 Could Be Oversold

Thomas Lee, head of research at Fundstrat, has cast a spotlight on the perceived undervaluation of the S&P 500.

“The S&P 500 is oversold pretty badly heading into FOMC rate decision day on Wednesday [September 20]. Pessimism is high, evidenced by the bear noise on X [Twitter],” Lee asserted.

Lee’s statement resonates with a prevailing sentiment among investors, who have exhibited heightened concern about the FOMC meeting and its potential influence on interest rates.

“I think the Fed is going to be in a much better place. I think it is not quite a victory lap, but I think it is going to drastically lower the odds of a November hike. I think it reduces interest rate volatility, which would be good for stocks,” Lee optimistically added, reflecting upon the upcoming announcement.

Read more: How to Protect Yourself From Inflation Using Crypto

Indeed, ever since the dawn of 2023, there has been skepticism surrounding equity markets. Many have been anticipating a recession, fortified by the events over the past nine months.

“It is disturbing to see interest rates creep up, but I actually think there could be an important pivot tomorrow. I mean it just depends on how the markets react to the Fed statement,” Lee concluded.

Bitcoin at Risk of Steep Correction

On the other hand, Bitcoin recently witnessed a price uptick of over 5% within a week. Trading firm QCP Capital attributes this surge to rumors surrounding a delay in Mt. Gox repayments to 2024.

The long-awaited deadline for repayments of the collapsed crypto exchange might undergo a shift. Subsequently, igniting a short squeeze similar to the United States Securities and Exchange Commission (SEC) vs. Grayscale judgment in the previous month. Still, QCP Capital maintains its bearish stance on Bitcoin’s trajectory.

“In BTC, the current Wave 2 of our C Wave expanded flat has so far bounced which we expected, but we still need to see the super crucial Wave 3 that breaks the local lows for our count to be intact. The invalidation point would likely be a break of prior highs above 32,000,” QCP Capital affirmed.

Read more: Bitcoin Price Prediction

Bitcoin Price Prediction
Bitcoin Price Prediction. Source QCP Capital

Global economic events are casting a shadow on the crypto markets. Indeed, the S&P 500’s volatility index (VIX) has been displaying patterns reminiscent of 2020, which saw a record volatility spike amidst the Covid-19 crash. QCP Capital opines that the upcoming FOMC meeting will not catalyze another volatility outburst, predicting a probable pause in rate decisions.

Yet, the current economic panorama brims with uncertainties. Rising oil prices, looming inflation, and a potential US government shutdown by month-end intensify the unpredictability.

“In such a scenario without Fed easing, equities will likely be down, taking Bitcoin down with it until the Fed acts,” QCP Capital accentuated.

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Bary Rahma
Bary Rahma is a senior journalist at BeInCrypto, where she covers a broad spectrum of topics including crypto exchange-traded funds (ETFs), artificial intelligence (AI), tokenization of real-world assets (RWA), and the altcoin market. Prior to this, she was a content writer for Binance, producing in-depth research reports on cryptocurrency trends, market analysis, decentralized finance (DeFi), digital asset regulations, blockchain, initial coin offerings (ICOs), and tokenomics. Bary also...