The Bitcoin (BTC) price crashed shortly after the 2014 and 2018 U.S. midterm elections. While the price action is similar, indicator readings suggest the same will not happen this time.
The 2014 and 2018 U.S. midterm elections were held on Nov. 4 and Nov. 6, respectively (black vertical lines). Interestingly, the crypto market crashed sharply right after the elections were done.
The 2022 midterm election night will be on Nov. 8 (white) line. They will be held under President Joe Biden.
Here we look at the similarities and differences between Bitcoin (BTC) and total crypto market capitalization (TOTALCAP) price movement between the previous and current elections.
Bitcoin Price Action Shows Similarities
The main similarity when looking at the Bitcoin price movement is the time from the all-time high until the elections. More specifically, there were 350 days after the 2014 and 336 days after the 2018 elections.
In both 2014 and 2018, the Bitcoin price crashed the week after the elections. The crash continued for roughly a month and had a magnitude of 58 and 51%, respectively. In the current movement, a decrease of 50% would take the BTC price to $10,400.
RSI Movement is Completely Different
While the price action between these periods is similar, the RSI movement is not. In 2014 and 2018, the RSI did not decrease below 40 until after the elections. Afterward, the bottom was reached at 35 and 37, respectively.
In the current cycle, the RSI has decreased well below 40. The June 2022 RSI bottom (red icon) of 34 is the lowest ever recorded.
Moreover, the RSI has already begun to generate bullish divergence (green line). This is a sign associated with bullish trend reversals.
So, unlike the price action, technical indicator readings indicate that the price movement after the midterm elections will be dissimilar to 2014 and 2018, meaning a crash is unlikely.
Cryptocurrency Market Cap Gives Bullish Reading For Midterms
The cryptocurrency market cap gives a relatively bullish outlook.
Firstly, it shows a double bottom, considered a bullish pattern. Both bottoms had long lower wicks (green icons).
Secondly, the weekly RSI has generated bullish divergence (green line).
Finally, the weekly RSI is in the process of breaking out from its bearish divergence trend line (black).
While this has yet to occur, it is worth mentioning that the market cap is still far away from its own resistance line. So, an increase to it would amount to a nearly 24% upward movement.
As a result, it seems more likely that a rally will follow the midterm elections rather than a breakdown.
For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.
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