Bitcoin price action takes step back as US midterm results set to hit wires

• Bitcoin price action tanks over 4% intraday, breaking below $20,000 as the US casts its votes in the congressional midterm elections.
• BTC price faces headwinds from uncertainty on the outcome as it might take until December before all seats get allocated. 
• The most likely scenario points to either a Republican win in the Senate or the House, which makes Biden a lame duck.

Bitcoin (BTC) price action slips over 4% intraday and 7% with the weekend sell-off included. The uncertainty on the outcome of the US midterms weighs on investor sentiment and faces even more pressure in the aftermath of Musk tweeting to vote Republican as Tesla shares tank. It points to a very nervous event with a binary outcome in the coming days and weeks as results and runoffs are set to occur.

BTC price action would favour a Republican landslide win

Bitcoin price action’s break below the $20,000 handle is telling of the nervousness from investors toward the outcome of the US midterm results. Markets favour either a split between the House and the Senate or an overall victory for the Republicans. BTC price action would thus rally on the back of the fact that Biden would become a lame duck president who could not push through any significant reforms, which often come with a hefty price tag. One of the above scenarios would see BTC price action rally once the count gets confirmed, certainly if some swing states fall into the hands of the Republican Senate. Expect a very tiered response as the results slowly clarify the outcome.

Expect first to see a pullback above $20,000 at first, should a slim Republican majority be seen in the first 48 hours. Next up will be a jump toward $21,200 should one or two swing state Senate seats go to Republicans – Pennsylvania or Georgia for instance. In the ideal scenario, $21,969 would come into play with a break above the monthly R1 resistance level in case it becomes clear that Republicans win both the House and the Senate.

BTC/USD daily chart

The risk to the downside, which needs to be taken into account, is that Trump is set to announce that he will run for the presidency again in 2024. That could push away many voters from Republicans toward the Democrats. BTC price action would test $19,036 to the downside and could break below there to test the waters at $18,000 by December.

 

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