Bitcoin Slips Into Technical Correction Ahead of US Midterm Elections and NFP Report
Key Takeaways
- •Bitcoin has fallen 11.7% from its October high into a technical correction and was trading around $77,246.
- •The US midterm elections carry major implications for crypto because Congress shapes digital asset regulation, and a Democratic sweep could hinder the CLARITY Act while raising the likelihood of SEC investigations and stricter rules.
- •Spot Bitcoin ETFs recorded outflows of $698 million on Friday and $398 million on Monday, and the funds, led by BlackRock's IBIT with over $61 billion in assets, collectively hold $98 billion.
- •Economists forecast the October jobs reports to show more than 60,000 positions added, up from 29,000 in September, and a stronger result would increase the chance of a Federal Reserve rate hike, a scenario in which Bitcoin historically underperforms.
- •Technical indicators, including a drop below the 50-day EMA, the 23.6% Fibonacci level, and the Supertrend, point to a bearish outlook with the next target at $72,565 and potential further declines toward $70,000.
Bitcoin has slipped into a technical correction this month — a term traders use for a drop of 10% or more from a recent peak — falling 11.7% from its highest point in October. The cryptocurrency was trading at $77,246 at the time of writing as investors reacted to the upcoming US nonfarm payrolls (NFP) data and the US midterm elections — two near-term catalysts expected to shape the coin's direction in the days ahead.
US Midterm Elections in Focus
Bitcoin's price has declined over the past few months as the rally experienced in the third quarter started to fade. The next important driver for the asset is the US midterm elections taking place today, which carry major implications for Bitcoin and other altcoins, since Congress shapes the regulatory framework that governs digital assets in the United States.
On the positive side, if Democrats win the Senate and the House of Representatives, there is a likelihood they will put the brakes on Trump's self-dealing that has affected the crypto industry. They are also likely to start investigations into the Securities and Exchange Commission (SEC) over its actions.
On the negative side, winning both chambers would make it less likely that Democrats vote to advance the CLARITY Act, the market-structure bill that seeks to split digital asset oversight between the SEC and the Commodity Futures Trading Commission (CFTC). Odds of the bill passing and being signed into law by President Trump have dropped sharply this month. Democrats may also seek to use their leverage in the two houses to push stricter crypto rules when negotiating with Republicans and the Trump White House. At the same time, their control would raise the possibility of a prolonged government shutdown, and historically such shutdowns have had a mixed impact on Bitcoin and other assets.
There are signs that American investors are moving to safety ahead of the elections. One leading indicator is that spot Bitcoin ETFs, which market participants track as a barometer of institutional demand for the coin, have shed assets in the past few days, with outflows jumping to $398 million on Monday after reaching $698 million on Friday. These funds now hold $98 billion in assets. BlackRock's IBIT commands the biggest market share with over $61 billion in assets, followed by funds from companies such as Fidelity and Grayscale.
US Nonfarm Payrolls Data
The other important catalyst for Bitcoin will also come from the United States, which is set to release a series of key jobs numbers. ADP, the biggest payroll company in the world, will release October private payrolls data on Wednesday. After that, the Bureau of Labor Statistics will publish the official NFP report on Friday, the monthly snapshot of US hiring that investors parse for clues about the Federal Reserve's policy path.
Economists expect the data to show that the economy added over 60,000 jobs last month, a big increase from the 29,000 added in September. A stronger jobs report would boost the possibility that the Federal Reserve hikes interest rates at its next meeting. Bitcoin tends to underperform the market whenever the Fed is hiking interest rates.
Bitcoin Price Forecast: Technical Analysis
The daily chart shows that the BTC price has come under pressure in the past few days, slumping from a high of $87,365 to the current $77,177. The coin has dropped below the 50-day Exponential Moving Average (EMA), the 23.6% Fibonacci Retracement level, and the Supertrend indicator.
Bitcoin has also formed a series of lower lows and lower highs, and it is hovering near the Major S/R pivot point of the Murrey Math Lines tool.
As a result, the path of least resistance for the coin is bearish, with the next key target at $72,565 — a level that coincides with the 50% Fibonacci Retracement. A drop below that level would point to further declines toward the psychological level of $70,000. The analysis adds that a move above the resistance at $80,000 will point to more downside.
This article is based on reporting by The Market Periodical. Source: Bitcoin Price Prediction Ahead of US Midterm Elections, NFP Report
