Bitcoin dipped below $80,000 on Thursday, as a return of investor optimism after a historic Democratic sweep of Congress in the U.S. midterm elections faded somewhat.
The flagship cryptocurrency gave back some early gains to trade 0.7% lower at $79,607, after enjoying its best day since Sept. 21 on Wednesday. Bitcoin rallied alongside U.S. stocks on Wednesday, and was fueled by oil prices tumbling over 8%.
Regulation is the point of contention for the crypto industry under the Democrats. The blue victory could spur a negative reaction on perceptions of tougher or slower digital-asset regulation, crypto analysts said.
Over the longer term, the industry will have to adjust to a Democrat-majority congress, though it is worth noting that bitcoin is now far more embedded in the traditional financial system than in past cycles, Glassnode analysts said. Banks, asset managers and exchange-traded funds are invested, making a change in Washington less of a threat than it would have been a few years ago, they added.
Long-term allocators to bitcoin, including pension funds, should not alter their approach as Congress switches from Republican to Democratic control, Cartwright's investment consulting director, Sam Roberts, said. "Supportive U.S. legislation helps at the margin, but it should not be the trigger to review strategy," he says. Roberts added that the congressional switch makes the growing U.S. fiscal deficit even harder to change course on, potentially making a case for scarce assets such as gold and bitcoin.
Investors will look to nonfarm payrolls data for October, to be published Friday, for clues on the interest-rates picture.
Ether was 1.1% lower at $2,389.93 after gaining almost 5% on Wednesday.
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