The crypto market is plummeting due to macroeconomic conditions. The Federal Reserve is engaging in quantitative tightening to curb the soaring inflation. However, experts reveal why the months of November and beyond after the midterms can bring some relief to the crypto market.
Major stock market influencer and trader, @CanteringClark, shared data on Twitter, highlighting the performance of the stock market before and after the midterm elections. The US midterm elections will be held on the 8th of November, 2022.
US midterm elections to affect crypto prices
According to data, the stock market generally performs poorly in the months leading up to the midterm elections. On the other hand, the stocks almost always skyrocket in the months following the elections. No matter the performance of the president’s party, the months after the election almost always outperform the months before.
According to Clark, this is especially true in the 1970s decade. Experts believe that the 70s decade had loosely similar macroeconomic conditions to the present day. In the 12 months leading up to the elections, the markets fell by 13% in 1966,15% in 1970, and 32% in 1974. However, the market bounced back by 17%, 13%, and 20% respectively in the 12 months after the election.
According to Clark, the year 1974 has significantsimilarities to the current macroeconomic conditions. The inflation level hit 8.8% during the same period. As a result, the stock market fell close to 32%. However, the markets made a strong recovery of 20% after the election.
Clark notes that the current market behavior is on par with the other years in terms of total volume realized. Therefore, November and December will likely be good months for the market.
The crypto market is strongly correlated with the general market since 2020. Crypto assets behave similarly to tech stocks and the tech-oriented NASDAQ. Therefore, the months after the midterms may give something to cheer for the bulls.
Current crypto market condition
Bitcoin went downunder $19,000 while Ethereum plummented under $1,300. The crypto market cap has also fallen below $950 billion, a 6.4% change in the last 24 hours alone. It’s not the positive sign that investors wanted, especially after having patiently endured an ongoing ‘crypto winter’ in 2022.
It’s hard to say what has motivated the outflow of capital, as there have been several potential incidents that may have had a bearing on the drop in prices. The discussion has been particularly strong for Ethereum after the Merge.
Ethereum back under $1,300 following The Merge
Ethereum dropping under $1,300 is perhaps a more significant piece of news than Bitcoin’s drop. After all, many were expecting the asset to benefit from positive price movement following The Merge. That does not appear to be the case in the short term, however.
There are a few reasons that seem likely as to why the price of ETH dropped.
First, SEC Chair Gary Gensler stirred discussion after he suggestedthat the switch to a staking model could more likely make ETH asecurity. There has been no definitive statement on this, but the debate on this topic has raged on for a while.
There have also been some concerns aboutcentralization, asSantiment dataalso showed that over 45% of Ethereum transactions were processed by two wallets. Analysts have also been pointing out that flashbots have relayed over 82% of Ethereum’s block post-merge.
Fed decisions awaited
There is another major reason why analysts are pessimistic about the near-term outlook of the crypto market and other markets. This is the fact that the United States Federal Reserve is expected to raise interest rates in its upcoming meeting by another 75 basis points.
Bitcoin price analysis
Bitcoin price failed to surpass the$20,500 resistance level. After a sharp decline BTCis now consolidating losses below $19,200 and the 100 hourly simple moving average.The next major resistance sits near the $19,350 level. It coincides with the 50% Fib retracement level of the recent decline from the $20,197 swing high to $18,706 low.
Source: BTCUSD on TradingView.com
If Bitcoin fails to start a recovery wave above the $19,050 resistance zone, it could continue to move down. An immediate support is near the $18,700 zone. A clear move below the $18,700 and $18,550 levels might open the doors for a move towards the $18,000 level.
Hourly MACD – gains pace in the bearish zone
Hourly RSI (Relative Strength Index) – below the 50 level
Major Support Levels – $18,700, $18,550
Major Resistance Levels – $19,050, $19,300, $19,500
Ethereum price analysis
Ethereum failed to gain strength for a move above the $1,480 and $1,500 resistance. After forming a top near the $1,475 level ETH started a fresh decline.
Ether price is now consolidating losses above the $1,280 level and below the100 hourly simple moving average. On the upside, the price is facing resistance near the $1,335 level. It is near the 23.6% Fib retracement level of the recent decline from the $1,474 swing high to $1,288 low.
Source: ETHUSD on TradingView.com
An initial support on the downside is near the $1,300 zone, the next support is near $1,260. A downside break below that level might push ether price towards the $1,200 level.
Hourly MACD –gains momentum in the bearish zone
Hourly RSI –below the 50 level
Major Support Level – $1,300
Major Resistance Level – $1,360
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