Following the two previous US midterm elections, the price of Bitcoin dropped sharply, but that might be different this time. Despite breaking through the bearish divergence trend, the market capitalization is far from its resistance line.
The value of Bitcoin (BTC) collapsed shortly after the 2014 and 2018 US midterm elections. However, that may not occur this time despite the similarities with the current price action.
The 2014 and 2018 US midterm elections took place on November 4th and 6th, respectively. Following those voting processes, the crypto market suffered a sharp drop.
As for 2022, the US midterm elections will occur while Joe Biden holds the presidency.
There will be similarities and differences between Bitcoin and the overall capitalization of the crypto market in the previous and current elections.
Similarities in the Price of Bitcoin after Each US Midterm Election
The time between the all-time high of Bitcoin and the election is the most prominent similarity in the price action. The milestone occurred 350 days after the 2014 elections and 336 days after the 2018 ones.
The value of Bitcoin collapsed in 2014 and 2018 following the US midterm elections. It continued falling for about a month by up to 58% and 51%, respectively. The current price action might cause it to decline by around 50% to USD 10,400.
Despite Similarities in the Price Action, the RSI Is Different
Although the price action between those periods is similar, the movement of the RSI is different. After the indicator only dropped below 40 after the 2014 and 2018 elections, its respective bottoms were 35 and 37.
The RSI has moved well below 40 in the current cycle, reaching 34 in June, its lowest level on record. In addition, the indicator has generated a bullish divergence, a sign associated with trend reversals.
Unlike the price action, technical indicators show that the movements of Bitcoin after the US midterm elections will differ from those in 2014 and 2018.
The Capitalization of the Crypto Market Suggests a Bullish Outlook
The overall capitalization of the crypto market cryptocurrencies shows a relatively optimistic outlook for Bitcoin. Its price shows a double dip pattern, considered bullish, as both holes have long lower strands.
Then, the weekly RSI generated a bullish divergence while seeking to break above its bearish divergence trend.
Although it has not broken through the bearish divergence trend, the market capitalization is still far from its resistance line. Therefore, an increase would amount to a bullish movement close to 24%.
After the US midterm elections, there might be a rise rather than a drop in the price of Bitcoin.
Meanwhile, Bitcoin is trading at around USD 19,758 and has accumulated a 5.1% loss over the last 24 hours. While its daily trading volume is above USD 432.19 billion, its market capitalization is about USD 379.39 billion, according to CoinGecko.
Investors should research Bitcoin before buying it to know its all-time high, behavior, and possible future price. That will help them make better trading decisions and reduce the risk of losing money. The current US midterm elections may affect BTC either positively or negatively.
By Alexander Salazar
