The CCV business cycle index confirmed expansion after 51 months of contraction, with readings above 51 for August, September and October. The analysis links that shift to Bitcoin’s historical post-midterm performance and a possible productivity boost from AI investment.
Why it matters
The speaker argues that economic conditions matter more to crypto than the election calendar alone. In the cited history, Bitcoin rose in each of the four years following a US midterm election: about 1,400% in 2011, 35% in 2015, nearly 90% in 2019 and 155% in 2023. The S&P 500 was also higher one year after each of 20 midterm elections going back to 1946, the analysis says.
The index combines manufacturing surveys from five regional Federal Reserve banks. August registered 55.2 and September 53.2, with October also above the expansion threshold. Four of five regional districts were positive in October, according to the analysis.
The speaker cautions that the pattern does not promise a smooth run. Bitcoin has struggled during midterm years, and the analysis points to Federal Reserve quantitative tightening as an important factor in the 2018 and 2022 downturns. In 2018, Bitcoin fell about 45% in the month after the election before gaining about 45% over the following 12 months.
Market impact
A second possible tailwind is productivity growth. The analysis cites productivity up 2.2% from a year earlier and averaging about 2.1% during the current business cycle, compared with 1.5% in the prior cycle. It draws a comparison with the late 1990s, when productivity grew about 3% annually from 1996 to 2003, while noting that economists disagree about whether today’s conditions are comparable.
The near-term tests identified are the November 3 election, third-quarter productivity data due November 5 and incoming regional Fed surveys. Whether the expansion readings hold and productivity continues to climb will help determine if the bullish macro thesis gains support.
Frequently asked questions
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What does the CCV business cycle index measure?
It combines manufacturing surveys from five regional Federal Reserve banks to gauge economic conditions. The analysis says three consecutive monthly readings above 51 confirm expansion.
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How has Bitcoin performed in the years after US midterm elections?
The analysis cites gains in each of the four post-midterm years listed: about 1,400% in 2011, 35% in 2015, nearly 90% in 2019 and 155% in 2023.
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Why does the analysis warn that a post-midterm rally may not be smooth?
Bitcoin has struggled during midterm years. It fell about 45% in the month after the 2018 election before rising about 45% over the following 12 months.
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What productivity figures support the proposed macro tailwind?
The analysis cites productivity up 2.2% from a year earlier and averaging about 2.1% in the current business cycle, compared with 1.5% in the prior cycle.
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Which upcoming events does the analysis identify as checkpoints?
It points to the November 3 election, third-quarter productivity data due November 5 and incoming regional Federal Reserve surveys.
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