Dump after the midterm elections? Bitcoin Will See $12K If This 2018 BTC Chart Fractal Is Correct
While Bitcoin (BTC) investors may not consider the US midterm elections a significant event, an eerie fractal from 2018 may provide a clue as to what may happen before the year ends.
Will Bitcoin Reach $12K-$14K After Midterm?
Comparing Bitcoin’s price action before the 2018 midterm elections to 2022 shows a strikingly similar bear market trend.
For example, 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.
By 2022, the cryptocurrency has half mirrored this trend. The price is now waiting for a close below the current horizontal support level of around $19,000. With the midterm elections scheduled for November 8, the aforementioned breakdown scenario could happen sooner or later, as illustrated below.
Independent market analyst Aditya Siddhartha Roy believes 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.
$BTC Bottom analysis
Compared to 2018 and 2022 Bear Market
•Support to get weak – TrendLine manipulation – Mid term election – Dump after mid term election – #BTC Bottom
•Nov-Dec can be the bottom for #Bitcoin•Retweet appreciated #cryptocurrency #Crypto #ETH $ETH #Binance pic.twitter.com/GHDiHu4H3H
— Aditya Siddhartha Roy❁ (@Adityaroypspk) 16 October 2022
Bitcoin Stock Market Warnings
The bearish prediction surfaces as Bitcoin’s correlation with US stocks grows stronger in the wake of the Federal Reserve’s monetary policy. Both markets have witnessed sharp declines in the run-up to the US Federal Reserve’s rate hikes in 2022.
Historically, in 17 of the 19 midpoints since 1946, the stock market has performed better in the six months following an election than in the six months following it.
That’s primarily because of market expectations of higher government spending from a new Congress, notes Liz Ann Sonders, Charles Schwab’s investment strategist, who further argues that 2022 could produce a different result.
“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 protracted pandemic has already made this cycle, unlike previous gap years. With so many other forces at play in the market, I wouldn’t put much weight on mid-year historical results.”
As a result, Bitcoin remains at risk of sending US stocks lower, with $12,000-$14,000 price targets in sight.
Optimistic BTC Price Indicators
However, a segment of the crypto market sees Bitcoin decoupling from traditional markets, suggesting that the cryptocurrency may not lead the S&P 500 to crash after the midterm elections.
“At some point, the market will be controlled by those in the community who are long-term believers in BTC and are very unlikely to sell, and the growing global community that uses BTC for trading,” Stephane Ouellette, CEO of FRNT Financial Inc., told Bloomberg.
Related: Bitcoin clings to $19,000 as trader vows capitulation ‘will happen’
Ouellette’s statement came after the daily correlation coefficient between Bitcoin and the S&P 500 fell to 0.08 on October 9, the lowest in four months.
Meanwhile, the number of unique addresses with at least 1 BTC hit a new record high on October 17, bucking trends witnessed during the 2018 bear market. This suggests investors have been accumulating Bitcoin for local price drops.
“The on-chain data suggests that these holders are optimistic that the market will rebound, keeping the 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 suggest a period of accumulation ahead.
Comparing today’s structure with 2018 before capitulation is, imo, completely meaningless
Just by looking at the weekly RSI and MACD divergences are remarkable.
In 2018, the RSI was floating in an intermediate range of 45s, in 2022, the RSI has reached its lowest level ever. $BTC pic.twitter.com/3Zyp9DDPA6— Wolf (@IamCryptoWolf) 17 October 2022
In comparison, these oscillators were in the neutral zone before the 2018 midterm elections, meaning BTC’s price had more room to drop.
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