Originally published on: October 17, 2022
As the United States midterm elections approach, investors are eyeing an eerie fractal pattern from 2018 that could shed light on Bitcoin’s future price movements. A comparison of Bitcoin’s behavior before the 2018 midterm elections and its current trend in 2022 reveals a strikingly similar bear market trend.
In 2018, Bitcoin’s price steadily declined while maintaining a horizontal support level around $6,000, only to break below it after the midterm elections. Fast forward to 2022, and the cryptocurrency is following a similar trajectory, awaiting a close below the current support level of approximately $19,000. With this breakdown scenario looming, independent market analyst Aditya Siddhartha Roy predicts a potential drop to the $12,000-$14,000 range, echoing the market bottom seen in 2018.
The correlation between Bitcoin and U.S. equities has strengthened recently, posing a risk of Bitcoin trailing the stock market into a post-midterm election slump. The Federal Reserve’s monetary policies have contributed to sharp declines in both markets, raising concerns about Bitcoin’s future price movements.
However, some in the crypto community believe that Bitcoin may decouple from traditional markets, driven by long-term believers and global adoption for commerce. The recent drop in correlation between Bitcoin and the S&P 500 supports this view, suggesting a potential divergence in price movements.
Despite the uncertainty, on-chain data indicates growing optimism among investors, with a record high number of unique addresses holding at least 1 BTC. This accumulation during price dips hints at a positive outlook for Bitcoin’s market fundamentals.
Market analyst Wolf also points to oversold indicators on weekly charts in 2022, signaling a period of accumulation ahead. These technical signals contrast with the neutral zone oscillators observed before the 2018 midterm election, highlighting potential differences in Bitcoin’s price behavior this time around.
While the future remains uncertain, understanding historical patterns and current market dynamics can provide valuable insights for investors navigating the post-midterm election landscape. Stay informed and conduct thorough research to make well-informed investment decisions in the ever-evolving crypto market.
