While Bitcoin (BTC) investors may not regard the US midterm elections as a significant event, the dreaded fractal of 2018 may provide evidence of what could happen before the end of the year.
Will Bitcoin reach $12,000 – $14,000 after the term expires?
A comparison of Bitcoin price action leading up to the 2018 midterm elections with that of 2022 shows a strikingly similar trend to a bear market.
For example, BTC price trended lower in 2018 while holding a horizontal level near $6000 as support, only to break below after the midterm elections.
In 2022, the cryptocurrency reversed this trend midway. Its price is now awaiting a close below the current horizontal support level around $19,000. With the midterm elections scheduled for November 8, the aforementioned crash scenario may happen sooner or later, as shown below.
Independent market analyst Aditya Siddhartha Roy believes that the price of Bitcoin will drop to the $12,000-$14,000 range in the event of a similar crash. It also indicates that the cryptocurrency may expire in November or December 2022, just as in 2018.
BTC dollars Bottom analysis
Compared to the bear market 2018 and 2022
Weak support – trend line manipulation – midterm elections – emptying of elections after mid-term – #BTC lower
• November-December may be the bottom # bitcoin• Retweet rating #cryptocurrency # encrypt #ETH ETH dollar #finance pic.twitter.com/GHDiHu4H3H
– Aditya Siddhartha Roy❁ (@Adityaroypspk) October 16 2022
Stock Market Warnings About Bitcoin
A bearish forecast appears as Bitcoin’s correlation grows stronger with US stocks in the wake of the Federal Reserve’s monetary policies. Both markets saw sharp declines during the US central bank’s rate hike in 2022.
Historically, in 17 of the 19 midterms since 1946, the stock market has performed better in the six months after the election than in the six months after.
This is primarily due to market expectations of increased government spending from the new Congress, notes Liz Ann Saunders, chief investment analyst at Charles Schwab, who also argues that 2022 could produce a different outcome.
“An additional injection of money seems unlikely this year, given the government’s historical levels of spending and stimulus in response to the pandemic,” she explains, adding:
“The combination of high inflation, the war in Ukraine, and the ongoing pandemic has really made this cycle, unlike in previous half years. With so many other forces in the market, I wouldn’t put much weight in the historical mid-term performance.”
As a result, Bitcoin remains at risk of lowering US stocks, with a price target of $12,000-14,000.
Optimistic BTC Price Indicators
However, a section of the cryptocurrency market sees bitcoin’s decoupling from traditional markets, suggesting that the cryptocurrency may not cause the S&P 500 to crash after the midterm crash.
“At some point, the market will be controlled by those in the community who believe in bitcoin for the long term and are unlikely to sell and the growing global community that uses BTC to trade,” Stefan Oellet, CEO of FRNT Financial Inc. , tell Bloomberg.
RELATED: Bitcoin Holds on to $19,000 as Trader Promises Capitulation ‘Happen’
The statement came after the daily correlation coefficient between Bitcoin and the S&P 500 fell to 0.08 on October 9, the lowest level in four months.
Meanwhile, the number of unique addresses holding at least 1 BTC hit a new record on October 17, reversing the 2018 bear market trends. This indicates that investors accumulated bitcoin on local price dips.
“On-chain data indicates that these owners are optimistic that the market will bounce back, keeping the market fundamentals relatively healthy,” according to a note from crypto exchange Bitfinex.
Market analyst Wolf offered a similar view, pointing to the oversold Bitcoin Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicators on his weekly charts in 2022, which technically indicate a coming accumulation period.
Comparing the current structure to 2018 before the surrender, IMO, is completely meaningless
Just by looking at the weekly RSI and MACD differences.
In 2018, the RSI was moving in a middle range of 45 seconds, and in 2022 the RSI reached an all-time low. BTC dollars pic.twitter.com/3Zyp9DDPA6– Wolf (@IamCryptoWolf) October 17 2022
By comparison, these oscillators were in neutral territory before the 2018 midterm elections, which means that the price of BTC has more room to go down.
The opinions and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risks, you should do your own research when making a decision.
Originally published at San Jose News Bulletin
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