Bitcoin, Ethereum, BNB, SP500, And Nasdaq Expected To Rally Ahead Of U.S. Midterms
Since last week’s open of 113.07, the dixie (Dollar Index) is down 2.4%. At 110.657, the dixie could be headed lower as stock markets rally in what appears to be a bear market rally ahead of the US midterm elections.
Having traded in a range for two months, Bitcoin
The Binance coin also remains trapped in a horizontal ten-week range with a low of $255.374 and a high of $300. In addition, Ethereum
The SP500 has formed an inverted head and shoulder pattern, indicating a possible reversal of the bearish trend that began in January. The Dow Jones index, which is closely related, has formed a double bottom pattern, indicating a reversal to the upper side as well. The Nasdaq 100 index shows a distorted inverted head and shoulder pattern as well.
Fed monetary policy has been aggressive this year, with consecutive rate hikes since March. The US federal funds rate has been hiked four times, from 0.25% in March to the current 3.25%, and is expected to rise higher at the next Fed meeting next week.
President Biden’s oil plan to use strategic oil reserves to supplement supply and suppress energy inflation has been impressive this year, though oil prices have remained high with OPEC+ countries not collaborating and instead engaging in output cuts. Oil prices have dropped from a high of $124 per barrel to $84 between the March high and today.
The president announced last week a new plan to release 15 million more barrels from the strategic oil reserve in December. While this is expected to add significantly to the downward pressure on inflation, I believe it also benefits his administration politically, as it coincides with the November 8 midterm elections.
With two weeks left until the midterms, Biden’s administration could prop up the equity markets to create a positive economic environment to boost midterm polls. If the Democrats win the midterms, they could end or slowdown aid to Ukraine, and this could incentivize Biden to pull a few cards from up his sleeve.
If the Democrats or the Fed do something to prop up the equity markets, the strong correlation between equity markets and crypto markets could cause a subsequent rally in Bitcoin, BNB
According to BoFA’s Michael Hartnett, the Fed is petrified of a negative reaction to further rate hikes and could quickly pivot to avoid the negative effects of too much tightening. On the contrary, Blackrock warns that any midterm rally could end quickly as the Fed still has a mandate to aggressively hike rates to control the high inflation that stood at 8.2% in September.
The assets mentioned in this article are not a recommendation to trade or invest in. Trading and investing in the financial markets carries risk, and you should probably contact a professional investment adviser for investing advice.
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