US midterm elections: Bitcoin price forecast signals potential volatility shock for BTC

• The 200-day EMA remains a key floor for Bitcoin. The 100-day EMA continues to cap gains, with a break of either boundary likely to establish the next directional bias.
• $115.56 million left BTC spot ETFs on Tuesday, a modest outflow. The withdrawals suggest investors remained wary ahead of the US midterm election results.
• Despite a bullish BTC outlook, analysts anticipate a substantial move in either direction and prefer volatility-based strategies to directional positions.

$115.56 million flowed out of spot Bitcoin Exchange Traded Funds (ETFs) on Tuesday. The modest withdrawals reflect continued institutional caution ahead of the US midterm election results. On Wednesday, Bitcoin (BTC) is trading between its key 100-day and 200-day Exponential Moving Averages (EMAs). Price movements point to consolidation, with a break in either direction likely to establish BTC's next directional bias. 

For K33 Research analysts, a bullish view on the Crypto King does not rule out a volatility shock in either direction. They therefore prefer volatility-based strategies to directional positions.

Investor caution carries a mildly bearish bias

$115.56 million in modest BTC spot ETF outflows on Tuesday followed Monday's $398.62 million withdrawal, according to SoSoValue. Institutional demand has continued to soften this week. These consecutive sessions of redemptions indicate caution ahead of the US midterm election results and a mildly bearish stance towards BTC. A continuation and intensification of outflows through the week could bring a deeper BTC correction.

US midterm elections: Analysts anticipate a sharp move in either direction

The US midterm elections represent a key trigger for this week's market volatility, according to a K33 Research report published on Tuesday. Since then, Democrats have secured both the House of Representatives and the Senate. That result sets up a divided government and possible political gridlock for the rest of US President Donald Trump's term, which K33 Research regards as the most market-friendly outcome.

A significant change in K33's proprietary regime indicator has also emerged from diverging positioning in Bitcoin's Chicago Mercantile Exchange (CME) futures and perpetual (perp) futures, the report explained. Comparisons with past regimes point to greater BTC volatility but no clear direction: earlier episodes have delivered steep declines as well as substantial rallies. 

The analyst added: “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 close to historical lows, K33 also prefers exposure to volatility over directional positions. It particularly favours long straddles, which could benefit from large Bitcoin price moves after the election.

100-day and 200-day EMAs frame Bitcoin's technical consolidation

$77,876 is Bitcoin's price at the time of writing on Wednesday. Trading remains in consolidation between the 100-day EMA and the 200-day EMA. Overhead, the 50-day EMA at $80,044 continues to restrain BTC, limiting upside and suggesting a consolidative bias. 

On the daily chart, bullish momentum remains muted, with the Relative Strength Index (RSI) around 40. A negative Moving Average Convergence Divergence (MACD) histogram adds to the weak technical picture, supporting the view that prices remain range-bound beneath nearby resistance.

A daily close above the 100-day EMA at $77,794 would support a mildly bullish view. From there, upside targets lie at the 50-day EMA of $80,044 and then the horizontal resistance at $85,000. Should prices advance further, previous supply is likely to return at that latter level.

Failure to secure a close above the 100-day EMA could instead prolong the correction towards initial support at the 200-day EMA, near $76,479. Closing a daily session below that level would undermine BTC's technical structure and leave scope for a wider corrective phase.

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