The price of Bitcoin (BTC) crashed shortly after the 2014 and 2018 US midterm elections. While the price action is similar, the indicators suggest it won’t be the case even this time.
The 2014 and 2018 U.S. midterm elections were held on November 4 and 6, respectively (black vertical lines). It is interesting to note that the crypto market fell sharply right after the end of this election.
For 2022, the midterm elections will take place on November 8 (white line), under the presidency of Joe Biden.
Here we will look at the similarities and the differences between the evolution of the Bitcoin price (BTC) and the total crypto market capitalization (TOTALCAP) in the previous and current elections.
BTC price matches
The main standout similarity when looking at Bitcoin’s price action is the time between the asset’s all-time high and the election. Indeed, it was 350 days to the summit after the 2014 elections and 336 days after the 2018 one.
In 2014, as in 2018, the Bitcoin price crashed the week after the election. The decline lasted about a month and showed magnitudes of 58% and 51% respectively. Within the current move, a 50% drop would return BTC to $10,400.
A completely different ROI
While the price action appears to be similar between these periods, the movement of the RSI is not. In 2014 and 2018, the indicator only dropped below 40 after the elections. After that, the respective bottom was 35 and 37.
Within the current cycle, the RSI has fallen well below 40. The low of 34 in June 2022 (red arrow) is the lowest ever recorded.
Moreover, the RSI has already started generating a bullish divergence (green line). This is a sign associated with bullish trend reversals.
So, unlike the price action, data from technical indicators indicates that Bitcoin’s movement after the midterm elections will differ from that of 2014 and 2018.
Crypto Market Cap Provides Bullish Reading For Elections
The overall capitalization of the crypto market offers a relatively positive outlook.
First, the price is showing a double-dip pattern, which is considered a bullish pattern. Both cavities have long lower strands (green arrows).
The weekly RSI then generated a bullish divergence (green line).
Finally, the same weekly RSI is on track to break above its bearish divergence trendline (black line).
While it has yet to break through the latter, it is important to note that the market cap is still far from its own resistance line. An increase in this would therefore equate to an upward movement of almost 24%.
It therefore seems more plausible that after the midterm elections there will be a rise in prices rather than a fall.
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