Bitcoin Price Forecast: Could US midterm elections trigger a volatility shock for BTC?

• Bitcoin's next directional bias is likely to hinge on a breakout from its current range, with the key 200-day EMA providing support and the 100-day EMA restricting gains.
• Caution ahead of the US midterm election results appeared to weigh on investors, as BTC spot ETFs registered modest outflows of $115.56 million on Tuesday.
• Despite retaining a bullish view on BTC, analysts anticipate a sizeable price move in either direction and prefer volatility-based strategies to directional positions.

A consolidation phase continues to shape Bitcoin's (BTC) trading on Wednesday, with the price positioned between the key 100-day and 200-day Exponential Moving Averages (EMAs). A breakout on either side is likely to establish its next directional bias. Caution among institutional investors ahead of the US midterm election results was reflected in modest outflows of $115.56 million from spot Bitcoin Exchange Traded Funds (ETFs) on Tuesday. 

While K33 Research analysts retain their bullish stance on the Crypto King, they see the potential for a volatility shock in either direction. They therefore prefer strategies based on volatility rather than directional bets.

Are cautious investors leaning slightly bearish?

A slight bearish bias towards BTC persists among investors as institutional demand weakens further this week. According to SoSoValue data, Tuesday's modest $115.56 million outflow from BTC spot ETFs followed withdrawals of $398.62 million on Monday. These consecutive sessions of outflows point to continued caution ahead of the US midterm election results. Should withdrawals persist and gather pace through the week, BTC could face a deeper correction.

Could the US midterm elections trigger a sharp price move in either direction?

This week's US midterm elections were highlighted as a key driver of market volatility in a report published by K33 Research on Tuesday. Since then, Democrats have gained control of both the House of Representatives and the Senate. This paves the way for a divided government and possible political gridlock over the rest of US President Donald Trump's term, which K33 Research regards as the most market-friendly outcome.

According to the report, a substantial change in K33's proprietary regime indicator has been driven by diverging positioning in Bitcoin's Chicago Mercantile Exchange (CME) futures and perpetual (perp) futures. Comparisons with earlier regimes point to greater BTC volatility but no clear directional bias: past episodes have delivered steep drawdowns as well as sizeable rallies. 

The analyst also noted: “While we remain bullish on BTC and believe the bottom is in, thin support and elevated leverage leave room for further downside and amplified liquidation-driven moves,”

With three-month implied volatility also close to historically low levels, K33 prefers exposure to volatility over directional positioning. It particularly favours long straddles, which could gain from substantial movements in Bitcoin's price after the election.

Bitcoin technical outlook: Can price break out between the 100-day and 200-day EMAs?

Upside in Bitcoin remains constrained on Wednesday, with the price at $77,876 at the time of writing and consolidating between the 100-day EMA and the 200-day EMA. The 50-day EMA at $80,044 continues to cap BTC, limiting gains and suggesting that consolidation remains the prevailing bias. 

Nearby resistance continues to frame a range-bound market, with daily momentum indicators showing weakness. The Relative Strength Index (RSI), near 40, points to muted bullish momentum, while a negative Moving Average Convergence Divergence (MACD) histogram reinforces the subdued technical picture.

A daily close above the 100-day EMA at $77,794 would support a mildly bullish view. Beyond that, the 50-day EMA at $80,044 is the next upside objective, ahead of horizontal resistance at $85,000. If the advance extends to that level, earlier supply is likely to return.

If Bitcoin fails to close above the 100-day EMA, the correction could deepen towards initial support at the 200-day EMA, near $76,479. Closing below that level on a daily basis would undermine BTC's structure and create scope for a broader corrective phase.

(The technical analysis of this story was written with the help of an AI tool. Know more.)