Bitcoin rose on Wednesday after overnight losses triggered by the Democratic Party's midterm victories. It briefly touched a six-week low before recovering. At the time of reporting, Bitcoin traded near $78,568 and ether near $2,328, according to the HODLFM calculator data.
Markets shake off the overnight drop
The rebound followed a reversal in stocks, where US index futures fell as much as 2% overnight before turning higher. Bitcoin was up 1.9% on the day at $78,500, and Ethereum had gained 1.4%. Solana, dogecoin and cardano rose between 1.6% and 2.2%, according to CoinGecko data.
Bitcoin is still about 41% below the record above $125,000 it set in October 2025. The broader crypto market is worth around $2.63 trillion, per CoinMarketCap, and has lost roughly $300 billion in the last month.
What a Democratic Congress means for crypto
Democrats won control of both chambers. In the Senate they held 54 seats to the Republicans' 44, with five races uncalled, according to live election results. The party also secured a clear House majority.
Reuters noted that the result is a potential blow to an industry that has pushed for faster deregulation. President Donald Trump is the best-known advocate of lighter rules, though some Democrats have also backed a light-touch approach. The industry spent more than $300 million backing crypto-friendly candidates from both parties across the current and previous election cycles, in roughly equal measure.
Democrats have been largely skeptical of crypto and were seen blocking key legislation such as the Clarity Act. The pro-crypto laws passed in Trump's first two years were mostly Republican-backed, it added. Trump told the New York Times on Tuesday night that he would accept the results. The $TRUMP memecoin slid 7% after the vote.
The Clarity Act is the market structure bill meant to set out which regulator oversees which digital assets. The House passed it in July 2025, but it has stalled in the Senate. The GENIUS Act, the federal stablecoin law, was signed the same month. The new Congress does not take office until January, and committee leadership normally changes hands with control. Sen. Elizabeth Warren, a prominent crypto critic, is the top Democrat on the Senate Banking Committee. Fairshake, the industry-funded super PAC, was the main vehicle for the political spending.
Tim Sun, a senior researcher at HashKey, told Reuters:
"The market may be re-evaluating the risk-reward profile of crypto assets. On one hand, the string of security incidents is forcing investors to re-examine the industry's security infrastructure and custody risks."
He added:
"On the other hand, potential shifts in the US political landscape could stall the progress of structural crypto legislation and institutional framework development. All of these factors leave the crypto market facing strong headwinds."
Hacks and ETF outflows weigh on sentiment
The $6 billion hack of Binance last week, the largest in crypto history, hit sentiment hard. According to LSEG/Lipper data cited by Reuters, it triggered the largest net weekly outflow from bitcoin exchange-traded funds since early July, at $884 million. Investors pulled $215 million from the biggest bitcoin ETFs in October, which brings the year-to-date outflow to $1.84 billion.
Binance said on Nov. 1 that net outflows in the first hours after reopening were $3.64 billion, or 2.1% of its $171 billion in assets under management, so withdrawals have continued since.
Concerns about AI's potential returns and the burden of growing borrowing costs have caused investors to gravitate towards government bonds and safe-haven currencies. High fuel prices and a prolonged war in Iran among the causes of voter discontent. Block reported on Tuesday that gross profit from its bitcoin business fell 50% to $52 million in the September quarter.
What history says about the months ahead
A Nov. 4 market analysis noted that bitcoin entered this midterm above its 200-day average, which sits near $73,169. In 2014, 2018 and 2022, it traded below that average on election day, by about 35%, 9% and 22%. Those were bear market years. This year's decline was shallow, with much of it concentrated in January and February.
Martin Lee, research lead at DWF Labs, said in an email that "the first few months after a midterm have historically been choppy to slightly bearish for BTC, but it has been higher 12 months later every time. Cautious optimism is the approach we're taking."
He added:
"History favors BTC on a 12-month horizon, but expect near-term volatility, especially if the war escalates and the AI trade keeps weighing on risk assets."
The US jobs report is due Friday, and traders will use it to gauge Federal Reserve rate expectations.
Gunel Ismayilova
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