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Post-midterm elections dump? Bitcoin will see $12K if this 2018 BTC chart fractal is correct

3 min read
2 years ago admin
Post-midterm elections dump? Bitcoin will see K if this 2018 BTC chart fractal is correct

While Bitcoin (BTC) investors may not consider the U.S. midterm elections as a significant event, an eerie fractal from 2018 may provide a clue to what could happen before the year ends.

Bitcoin to hit $12K–$14K after midterms?

Comparing Bitcoin’s price actions prior to the midterm elections of 2018 with those of 2022 shows a strikingly similar bear market trend.

For instance, BTC price trended lower in 2018 while holding a horizontal level near $6,000 as support, only to break below it after the midterm elections.

In 2022, the cryptocurrency has halfway mirrored this trend. Its price now awaits a close below the current horizontal support level of around $19,000. With the midterm elections scheduled for Nov. 8, the said breakdown scenario could occur sooner or later, as illustrated below.

Independent market analyst Aditya Siddhartha Roy thinks Bitcoin’s price will fall into the $12,000-$14,000 range if a similar breakdown occurs. He further notes that the cryptocurrency could bottom out in November or December 2022, just like in 2018.

Stock market warnings for Bitcoin

The bearish prediction surfaces as Bitcoin’s correlation with U.S. equities grows stronger in the wake of the Federal Reserve’s monetary policies. Both markets have witnessed sharp drawdowns in the period of the U.S. central bank’s rate hikes in 2022.

Historically, in 17 of the 19 midterms since 1946, the stock market has performed better in the six months after an election than in the six months following it.

That is primarily due to the market’s expectations of higher government spending from a new Congress, notes Liz Ann Sonders, Charles Schwab’s chief investment strategist, who further argues that 2022 could yield a different outcome.

“An additional infusion of funds seems unlikely this year, given the government’s historic levels of spending and stimulus in response to the pandemic,” she explains, adding:

“The combination of high inflation, the war in Ukraine, and a lingering pandemic has already made this cycle, unlike prior midterm years. With so many other forces at play in the market, I wouldn’t put much weight in historical midterm-year performance.”

As a result, Bitcoin remains at risk of tailing U.S. stocks lower, with the $12,000–$14,000 price target in view.

Optimistic BTC price indicators

However, a section of the crypto market sees Bitcoin decoupling from traditional markets, suggesting that the cryptocurrency may not tail S&P 500 into a post-midterm election crash.

“At some point, the market will be controlled by those in the community that is long-term believers in BTC and very unlikely to sell and the growing global community which uses BTC for commerce,” Stephane Ouellette, chief executive of FRNT Financial Inc., told Bloomberg.

Related: Bitcoin clings to $19K as trader promises capitulation ‘will happen‘

Ouellette’ statement came after the daily correlation coefficient between Bitcoin and S&P 500 dropped to 0.08 on Oct. 9, the lowest in four months.

Meanwhile, the number of unique addresses holding at least 1 BTC reached a new record high on Oct. 17, contrary to trends witnessed during the 2018 bear market. This suggests investors have been accumulating Bitcoin at local price dips.

“The on-chain data suggests those holders are optimistic the market will bounce back, keeping market fundamentals relatively healthy,” according to a note from crypto exchange Bitfinex.

Market analyst Wolf offered a similar outlook, citing Bitcoin’s extremely oversold relative strength index (RSI) and Moving Average Convergence Divergence (MACD) indicators on weekly charts in 2022, which technically hints at a period of accumulation ahead.

In comparison, these oscillators were in the neutral zone prior to the 2018 midterm election, meaning BTC’s price had more room to decline.

The views 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 risk, you should conduct your own research when making a decision.