A trading strategy based on US midterm election cycles has identified a consistent pattern in Bitcoin's price movement over the past decade, according to analysis by CryptoGoos.
The pattern shows that Bitcoin has struggled during every midterm election year examined since 2014. In 2014, following the collapse of Mt. Gox, BTC declined significantly after the 2013 bull market. The 2018 midterm year saw Bitcoin plunge from nearly $20,000 to under $3,500. In 2022, the asset entered a severe downturn amid Federal Reserve rate increases, the Terra/LUNA collapse, and a broader crypto credit crisis, eventually reaching $16,000 after the November 8 midterm elections.
Research from CryptoQuant found that Bitcoin declined by more than 60% during each of these three midterm election years.
Post-Election Recovery Pattern
The strategy's key finding concerns what happens after the midterm elections. Historical data shows that Bitcoin has rebounded strongly in the 12 months following US midterm votes. Analyzing the three previous cycles, the average gain following the election exceeded 50%.
Rather than suggesting the elections themselves directly cause price movements, the analysis points to midterm years coinciding with conditions that pressure risk assets, including political uncertainty, reduced investor appetite, and changing fiscal expectations. Once the election passes, this source of uncertainty diminishes, allowing markets to price fiscal, regulatory, and monetary policy with greater confidence.
