The crypto market is in a significant slump as a result of macroeconomic conditions.
The Federal Reserve is engaging in quantitative tightening to combat rising inflation. However, analysts explain why the months of November and beyond after the midterm elections might bring some relief to the cryptocurrency market.
Cantering Clark, a major stock market influencer and trader released statistics on Twitter highlighting the stock market's success before and after the midterm elections. The midterm elections in the United States will be held on November 8, 2022.
How Midterms Affect Crypto Prices
According to data, the stock market performs poorly in the months leading up to the midterm elections. On the other hand, equities usually always surge in the months following the elections. Regardless of the president's party's performance, the months after the election almost outperform the months before.
Clark claims that this was especially true throughout the 1970s decade. Experts believe that the 70s decade had macroeconomic conditions that were relatively similar to the present day. In the year preceding the elections, the markets plunged 13% in 1966, 15% in 1970, and 32% in 1974. However, the market recovered by 17%, 13%, and 20% respectively in the 12 months after the election.
According to Clark, the year 1974 shows strong similarities to the current macroeconomic situation. During the same time period, inflation reached 8.8%. As a result, the stock market dropped over 32%. However, the markets recovered by 20% following the election.
Clark notes that the present market behavior is similar to previous years in terms of overall volume realized. As a result, November and December are anticipated to be positive months for the market.
Since 2020, the cryptocurrency market has been highly correlated with the broader market. Crypto assets act similarly to tech equities and the NASDAQ. As a result, the months after the midterm elections may provide something to cheer for the bulls.
Can The Fed Be An Obstacle
According to a Bloomberg survey, analysts expect the Fed will stay hawkish until 2023. As a result, the Fed's quantitative tightening this year may derail the historical pattern.
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Topic: Crypto Market Plummets, Why Next Rally May Take As Long As November? (Read 307 times)