The crypto market is in a big rut due to macroeconomic conditions. The Federal Reserve is committed to quantitative tightening to curb rising inflation. However, experts reveal why the months of November and beyond may bring some relief to the crypto market after the midterms.
@CanteringClark, a major influencer and trader in the stock markets, shared data on Twitter, highlighting the stock market’s performance before and after the midterm elections. The US midterm elections will be held on November 8, 2022.
How midterms 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, stocks almost always shoot up in the months following an election. Regardless of the performance of the president’s party, the months following the election almost always perform better than the months before.
According to Clark, this is particularly true of the 1970s decade. Experts believe that the decade of the 1970s had roughly similar macroeconomic conditions as today. In the 12 months leading up to the election, markets fell 13% in 1966, 15% in 1970 and 32% in 1974. However, in the 12 months following the election, the market rallied 17%, 13% and 20% respectively.
According to Clark, the year 1974 has meaning Similarities to current macroeconomic conditions. The level of inflation reached 8.8% in the same period. As a result, the stock market fell almost 32%. However, the markets rebounded strongly by 20% after the election.
Clark notes that current market behavior is comparable to previous years in terms of total volume realized. Therefore, November and December are likely to be good months for the market.
The crypto market has been highly correlated with the general market since 2020. Crypto assets are behaving similarly to tech stocks and the tech-centric NASDAQ. Therefore, the months following the midterms could give bulls something to cheer about.
Can the Fed be an obstacle?
A Bloomberg poll shows economists believe the Fed will remain hawkish well into 2023. Therefore, the Fed’s quantitative tightening may ruin the historic trend this year.
The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.