The price of Bitcoin (BTC) plummeted shortly after the US mid-term elections of 2014 and 2018. However, while the price action is similar, the indicator readings suggest it won’t do so this time around either.
The mid-term elections in the United States of 2014 and 2018 took place on November 4 and 6, respectively (black vertical lines). Interestingly, the cryptocurrency market dropped sharply right after this election ended.
For 2022, the mid-term elections will take place on November 8 (white line), under the presidency of Joe Biden.
Here we will look at the similarities and differences between the evolution of the price of Bitcoin (BTC) and the total market capitalization of cryptocurrencies (TOTALCAP) in the previous and current elections.
Price similarities of BTC
The main similarity evident when looking at Bitcoin’s price action is the time between the asset’s all-time high and the election. In fact, there were 350 days to go to the summit after the 2014 elections and 336 days after the 2018 ones.
In 2014 as in 2018, Bitcoin’s price plummeted the week after the election. Its fall continued for about a month and showed a magnitude of 58% and 51%, respectively. Within the current move, a 50% drop would bring BTC back to $ 10,400.
A completely different ROI
While the price action between these periods appears to be similar, the movement of the RSI is not. In 2014 and 2018, the indicator dropped below 40 only after the elections. Subsequently, the respective minimum was 35 and 37.
Within the current cycle, the RSI has moved well below 40. Its low of 34 in June 2022 (red arrow) is the lowest on record.
Furthermore, the RSI has already begun to generate a bullish divergence (green line). This is a sign associated with bullish trend reversals.
So, unlike price action, technical indicator data indicates that Bitcoin’s movement after the mid-term elections will be different from that of 2014 and 2018.
The cryptocurrency market cap provides a bullish reading for the election
Total cypto market capitalization presents a relatively bullish outlook.
First, its price shows a double dip pattern, which is considered a bullish pattern. Both of these cavities have long lower threads (green arrows).
The weekly RSI therefore generated a bullish divergence (green line).
Finally, this same weekly RSI is on track to break out of its bearish divergence trend line (black line).
While it has not yet broken through the latter, it is important to note that the market cap price is still far from its resistance line. Therefore, an increase in this would be equivalent to an upward movement of nearly 24%.
It therefore seems more plausible that after the mid-term elections there will be an increase in prices rather than a decline.
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