While the United States Federal Reserve (FED) confirmed its restrictive inflation-fighting monetary policy by raising its key rate to 4%, the price of Bitcoin (BTC) is expected to suffer from the impact of the mid-term elections. mandate in the United States on Tuesday, November 8, 2022 and finally make his technical choice for an impulsive movement at the end of the year.
The FED remains hawkish and the equity market is under pressure
The United States Federal Reserve (FED) unveiled a new monetary policy decision on Wednesday November 2 with an increase in its key rate from 3.25% to 4%confirming its restrictive inflation-fighting policy.
Although Jerome Powell mentioned a possible slowdown in the pace of rate hikes, the latter is not close to ending without the mark of a first signal of disinflationa still difficult context for risky assets on the stock market.
According to the market consensus, the American Central Bank should continue to raise its key rate down to the 5% level early next year. In any case, this is the teaching of the price of future contracts traded on the Chicago Stock Exchange on the Fed Funds interest rate.
This restrictive monetary outlook will continue as long as underlying inflation (excluding energy and food) remains on an upward trend and the labor market in the United States remains under tension.
The graph below recalls the link between the fall in share prices and the rise in interest rates on the market, a cross-asset framework that is not crypto-friendly.
In the immediate future for this beginning of November, it is the midterm elections in the United States that will influence stock prices.
On Tuesday, November 8, all of the seats in the United States House of Representatives and some of those in the Senate (the House of Representatives and the Senate form the United States Congress) are renewed.
The outcome of these elections will decide the room for maneuver of the Biden administration’s budgetary and fiscal policy, with a strong impact on the equity market and a ripple effect on cryptocurrencies.
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The long-awaited technical inflection on the Bitcoin price could therefore take place from this date.
Weekly evolution of the S&P500 index and the US 2-year bond rate (in blue)
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Autumn 2018 VS spring 2019: what is the current technical pattern of the market?
Back to the technical considerations for Bitcoin. The current debate pits the defenders of fall 2018 (market stall from $6000 to $3000 in November 2018) against those who defend the spring 2019 market pattern (bullish reversal chart pattern of March/April 2019); the common thread between these two periods was the volatility crush that we are currently targeting on BTC.
In my last video, I detailed the technical arguments of the two camps, my belief still being that the choice of the market is for the current of this month of November. Tuesday, November 8, in addition to being the day of the midterm elections in the United States, is also the day-to-day anniversary of the all-time high for the daily closing price of bitcoin, close to 70,000 at the time. $.
The month of October has just ended, so we benefit from a new monthly technical close and the histogram of the MACD line tips the scales in favor of the bullish scenario of the first half of 2019; but this is only one indicator among others.
Bitcoin price (weekly) with a zoom on the MACD technical indicator on this same long time horizon
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Vincent Ganne is a market strategist, technical analyst, trainer on the stock market and speaker on BFM Business. With a long experience in the field of analysis, he offers a global approach to financial markets. Both from a macroeconomic point of view and from a microeconomic point of view. Vincent Ganne also uses many aspects of chart analysis with the aim of forecasting trends in financial assets over the medium and long term.