November 8, 2022 marks the midterm elections in the United States. The last midterm elections was in 2018, when the bear cycle low was reached. The low was recorded after the election. Is there causality or is it just a coincidence?
When Satoshi Nakamoto invented Bitcoin, he thought about the effect to governments economy. Let us remind you that in his first publications he made reference to the ability of central banks to manipulate the economy. And that the halving is a fundamental part of Bitcoin’s monetary policy.
He probably thought of matching the halving with the U.S. elections as a “counter-cyclical” measure. Knowing that the normal thing to do before a presidential election is to print money to create artificial economic growth, Satoshi designed a system in which validators are rewarded with less and less bitcoin. Changes are introduced every four years, also timed to match with Olympics and leap years.
Let’s get to the present: is Joe Biden and the Democratic party interested in creating artificial economic growth now? Not right now, because the priority is to fight inflation even if it causes a spike in employment levels. The Federal Reserve, whose mandate is to keep the general price level stable and achieve full employment can afford the interest rate hikes we are seeing now to fight inflation. True, they may lead to increases in unemployment; but what if it is then corrected to coincide with elections? They are rational people, with rational expectations. So they make decisions accordingly.
And now, bitcoin and cryptocurrencies. Without abundant liquidity in the market risky projects run dry. It’s predictable when you have solid returns in fear-dominated environments. However, it also becomes more interesting to think long term, even if you trade more frequently in the short term.
In the histogram, we see how it accumulates in the falls and now we should see rising prices and accumulation in rising prices to confirm the change of trend. Below we see how it plans to accumulate in case of falls, having orders at 25000 USD and 22300 USD. The last line of defense is at 20,000 USD.
It is not worth spending a lot of time on the other currencies, at least until BTC finds a good quiet zone.
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