Bitcoin, Ethereum, BNB, SP500 and Nasdaq are expected to rally ahead of US midterms

Since last week’s opening at 113.07, the dixie (Dollar Index) is down 2.4%. At 110,657, the Dixie may be heading lower as equities rally in what appears to be a bear market rally ahead of the US midterm elections.

After trading in a row for two months, BitcoinBTC
remains trapped between $20,456 resistance and $18,117 support levels, significantly above June’s low of $17,578, which appears to be the bear market low so far.

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, EthereumETH
is also in a six-week range between $1,215.5 and $1,408.3.

The SP500 has formed an inverted head and shoulders pattern, indicating a possible reversal of the bearish trend that began in January. The closely related Dow Jones has formed a double bottom pattern, indicating a reversal to the upside as well. The Nasdaq 100 index is also showing a distorted head and shoulders pattern.

The Fed’s monetary policy has been aggressive this year, with consecutive rate hikes since March. The US federal funds rate has been raised four times, from 0.25% in March to today’s 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, even as oil prices have remained high with OPEC+ countries not cooperating and instead engaging in production cuts. The price of oil has fallen from a high of $124 per barrel to $84 between the highest level in March 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 contribute 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 can prop up the stock markets to create a positive economic environment to boost the midterm polls. If the Democrats win the midterms, they could end or slow aid to Ukraine, and this could motivate Biden to pull some cards up his sleeve.

If the Democrats or the Fed do something to prop up the stock markets, the strong correlation between stock markets and crypto markets could lead to a subsequent rally in Bitcoin, BNBGDP
Ethereum and Ripple, among other coins.

According to BoFA’s Michael Hartnett, the Fed is terrified of a negative reaction to further rate hikes and can pivot quickly to avoid the negative effects of too much tightening. On the contrary, Blackrock warns that any medium-term recovery could end quickly as the Fed remains mandated to raise interest rates aggressively to control high inflation which was 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 involves risk and you should probably consult a professional investment advisor for investment advice.