Bitcoin’s build during the 2022 bear market looks stronger than it did in 2018, but macro headwinds could crash the party this time around.
Investors may not see the US Mediterranean elections as a significant event, a mysterious fractal 2018 may provide a hint of what could happen before the year is out.
Will Bitcoin Hit $12K – $14K After Midterms?
Comparing Bitcoin price actions before the 2018 midterms with those in 2022 shows a strikingly similar bearish market trend.
For example, the price of BTC trended lower in 2018, holding a horizontal level at $6,000 as support, only to break below it after the midterm elections.
BTC/USD daily price chart with 2018 trend. Source: TradingView/Aditya Siddhartha Roy
In 2022, the cryptocurrency half reflected this trend. Its price is now waiting to end below the current horizontal support level around $19,000. With the middle storms scheduled for November 8th, such a breakout scenario could happen sooner or later, as illustrated below.
BTC/USD daily price chart trend 2022. Source: TradingView/Aditya Siddhartha Roy
Independent market analyst Aditya Siddhartha Roy believes that the price of Bitcoin will fall in the range of $12,000-$14,000 if a similar breakdown occurs. He further notes that the cryptocurrency could go down in November or December 2022, just like it did in 2018.
$BTC bottom analysis
Compared to the bear market of 2018 and 2022
• Support Weakened – Trendline Manipulation – Midterm Elections – Post-Midterm Election Dump – #BTC Bottom
• Nov-Dec could be low for #Bitcoin
• Retweet Appreciated #cryptocurrency #Crypto #ETH $ETH #Binance pic.twitter.com/GHDiHu4H3H
— Aditya Siddhartha Roy❁ (@Adityaroypspk) October 16, 2022
Stock market warnings for Bitcoin
The bearish forecast comes as Bitcoin’s correlation with US stocks strengthens in the wake of the Federal Reserve’s monetary policy. Both markets have seen sharp pullbacks in the run up to US central bank interest rate hikes in 2022.
Historically, in 17 of the 19 midterm elections since 1946, the stock market has performed better in the six months following the election than in the six months following.
Average performance of the S&P 500 in US mid-term election years. Source: Charles Schwab
That’s largely due to market expectations of higher government spending from a new Congress, says Liz Ann Sonders, chief investment strategist at Charles Schwab, who goes on to argue that 2022 could deliver a different result.
“An additional injection of funds this year seems unlikely, given the historic levels of government spending and stimulus in response to the pandemic,” she explained, adding:
“The combination of high inflation, the war in Ukraine and a long pandemic has already shaped this cycle, unlike in previous periods. With so many other forces at play in the market, I would not put much stock in historical mid-year performance put
The US money supply remains over $21 trillion. Source: FRED
As a result, Bitcoin remains at risk of tracking US stocks lower, with the $12,000-$14,000 price target ahead.
Bullish BTC price indicators
However, a section of the crypto market is seeing Bitcoin decouple from traditional markets, suggesting that the cryptocurrency may not track the S&P 500 in a post-Midterm election collapse.
“At some point, the market will be controlled by those in the community who are long-term believers in BTC and highly unlikely to sell to the growing global community that uses BTC for trading,” said Stephane Ouellette, CEO of FRNT. Financial Inc., he told Bloomberg.
Related: Bitcoin Holds Up at $19K as Trader Vows Surrender ‘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.
BTC/USD and SPX daily correlation coefficient in the last few days. Source: TradingView
Meanwhile, the number of unique addresses holding at least 1 BTC reached a new high on October 17, bucking the trends seen in the 2018 bear market. This suggests that investors have accumulated Bitcoin on local price increases.