Bitcoin rebounded from an earlier selloff after hitting a seven-week low, as investors weighed expectations that Democrats will sweep the US midterm elections and what that means for the crypto industry.
Bitcoin hovered around $77,900, roughly flat on the day, after falling as much as 2.8% earlier before recovering. US equity futures showed a similar pattern. The dollar weakened against all G10 currencies, reflecting expectations that Democratic control of Congress could lead to gridlock in Washington.
Major cryptocurrencies fell as initial vote counts came in. Democrats have historically advocated for tighter regulation of the crypto industry, and markets expect the party to take the House, with control of the Senate also hanging in the balance. Within hours after most polling stations closed, projections showed Democrats had won control of both chambers, while President Trump told media he would work with the opposition party.
"Because Trump said he will respect the election results and US voters have voted against war, people now have hope for renewed peace talks, and Bitcoin is rebounding," said Markus Thielen, head of 10x Research, referring to the war with Iran that broke out in February. "Bitcoin is currently oversold and should bounce."
Since 2024, when Trump ran for re-election as president, the digital asset industry has continued to spend money to influence the political landscape. According to consumer advocacy group Public Citizen, crypto companies donated $189 million to political action committees in the 2026 midterm election cycle through the first quarter, accounting for more than one-third of corporate election spending.
Investors' most immediate concern is that if Democrats take power, it could stall industry-backed legislation and impose stricter scrutiny on digital asset companies. The broader macroeconomic implications remain unclear. Political gridlock could limit fiscal stimulus and weigh on speculative assets, although lower Treasury yields could ultimately provide support by easing financial conditions.
Market Downturn
At present, Bitcoin trading has limited value as a gauge of overall market sentiment. The crypto market is facing the aftermath of last week's $6.3 billion hack of Binance, as well as fading retail enthusiasm amid the artificial intelligence boom. These pressures make it harder to distinguish macro-driven market swings from industry-specific problems that have already weighed on digital assets.
Democrats are set to control Congress, putting them at odds with President Trump's Republican White House. The Trump family's financial gains from crypto investments became a controversial topic this year, which stalled a regulatory bill seen as critical to the industry.
"Given that the crypto regulation bill, the Clarity Act, is already stalled in the Senate, a change in control likely means renegotiation rather than a rapid restart, and the market has largely priced this in," said Rachael Lucas, an analyst at BTC Markets.
Bitcoin is down about 5% from last Thursday's high, before the Binance hack. From Friday through Tuesday, US-listed spot Bitcoin exchange-traded funds (ETFs) saw more than $1.2 billion in outflows. The options market continues to show demand for downside protection across various expiry buckets, although open interest in several of the largest expiries remains dominated by call options, which are the right to buy Bitcoin.
"As the likelihood of a Democratic sweep grew, clients shifted from buying calls to buying puts," said Sean McNulty, a derivatives trader at market maker AQC Tech. "Market focus is shifting back to interest rates and exchange rates, which also drove today's Bitcoin decline."
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