Following the U.S. midterm elections, the cryptocurrency market recovered from its initial sell-off, with Bitcoin reclaiming above $78,000, as investors shifted their focus to what Democratic control of Congress may mean for digital assets.
- Following the U.S. midterm elections, Bitcoin rebounded above $78,000, supported by declining volatility and new buying pressure that fueled a broader market rally.
- CoinShares expects that under Democratic control of Congress, progress on U.S. cryptocurrency legislation will slow; however, Bitcoin may still face less regulatory uncertainty than exchanges and token issuers.
- Talos reported that Hyperliquid's main stock index perpetual contracts recorded an overnight trading volume of $848 million, approximately 81 times the trading volume of tokenized spot platforms.
- Ebury believes the election results are slightly negative for the dollar, but the more important market drivers remain Fed policy, inflation, and U.S. Treasury yields.
- Bitcoin's November rebound still faces institutional selling pressure, outflows from spot ETFs, and historical weakness following the "negative October" trend remain primary concerns.
Although the election results may slow down cryptocurrency legislation, market analysts who spoke to crypto.news believe Bitcoin’s next move will be more influenced by macroeconomic conditions, institutional capital flows, and Federal Reserve monetary policy than by political changes in Washington.
According to price data from crypto.news, Bitcoin rebounded to approximately $78,300 on November 4, after previously dropping toward $75,600 following the election results. As the Democratic Party gained control of both the House and the Senate, President Trump will need to work with a Congress controlled by the opposing party for the remainder of his term, putting downward pressure on Bitcoin.
This rally has been accompanied by a decline in market volatility and a recovery in stock index futures, but analysts caution that the initial market reaction to the election results may not determine the next direction of prices.
After the U.S. midterm election results, Bitcoin experienced a relief rally.
CoinShares research director James Butterfill told crypto.news that Bitcoin appears to have already priced in the possibility of a Democratic sweep of Congress before the election results were confirmed.
“My feeling is that Bitcoin has already priced in the expectation of a Democratic sweep, so once the uncertainty was removed, the market had room to rebound,” said Butterfill.
He added that the anticipated outcome does not necessarily mean a new wave of selling is imminent, especially since investors have already adjusted their positions ahead of the vote.
Data provided by institutional digital asset trading platform Talos to crypto.news shows that the market's immediate response was accompanied by a significant decline in implied volatility.
The Bitcoin DVOL index, which measures implied volatility in the cryptocurrency options market, fell 6%, while the CBOE Volatility Index, or VIX, declined 10%.
Kelly Ye, Head of Research at Talos, said that although settlement for individual contracts will take longer, prediction markets quickly absorbed the election results.
"Prediction markets priced in the midterm election results within hours, even though settlement will take longer, leading to a relief rally in traditional markets," Ye told crypto.news.
Talos noted that as results became clearer, prices on Kalshi and Polymarket’s non-U.S. platforms rapidly converged. Due to differing settlement mechanisms on the two platforms, the time required for contract settlement may vary even when market prices have already reflected the outcome.
This rally also extended to the decentralized derivatives market, allowing traders to react to the latest developments during the overnight session before U.S. traditional stock markets reopened.
Talos reported that Hyperliquid perpetual contracts tracking the Nasdaq 100 and S&P 500 indexes recovered their losses from election night after touching lows around 9:00 to 10:00 PM Eastern Time.
Subsequently, the proxy contracts for QQQ and SPY rebounded approximately 3.0 points and 2.2 points from their overnight low at 10:00 PM, closing the overnight trading session in positive territory.
Meanwhile, when regular trading closes, the corresponding spot exchange-traded funds cannot respond in the same way, as pre-market trading does not begin until 4:00 AM Eastern Time.
Trading volume also reveals significant differences between perpetual contracts and tokenized spot markets.
According to Talos, the overnight trading volume for perpetual contracts tracking XYZ100 and SP500 on Hyperliquid totaled $848 million, while the total trading volume across all tokenized spot platforms was approximately $10.5 million.
This means that during this period, the perpetual contract trading volume was approximately 81 times that of the tokenized spot market.
Among these, the trading volume of the XYZ100 contract was approximately 5.4 times its typical hourly volume, while the activity level of the SP500 reached about 6.3 times its usual level.
Ye stated that these data indicate traders prefer perpetual contracts when seeking exposure to major market events, especially when traditional stock markets are closed.
Talos also attributes part of the overnight rebound to buying from systematic strategies and commodity trading advisors, as lower volatility, reduced demand for downside hedging, and previously light positioning encouraged traders to increase exposure.
However, Ye warned that "the initial reaction is not always correct," meaning that the market's initial rebound should not be automatically viewed as confirmation of a sustained upward trend.
After Democrats took control of Congress, cryptocurrency regulation faces a more challenging path.
Although the market's immediate reaction has been relatively positive, the long-term impact of the election results on the crypto industry may be more complex.
Butterfill believes that after the Democrats swept Congress, a slowdown in regulatory reform is a major concern, particularly for companies that rely on new legislation to expand their operations.
“The greater concern is that crypto reform is slowing down. Advancing the CLARITY Act will be more difficult,” he said.
The CLARITY Act aims to establish a clearer regulatory framework for the U.S. digital assets market and has been a key legislative priority for the crypto industry.
With Democrats now controlling both chambers of Congress, the prospects for advancing the bill may become more difficult, especially given divisions among lawmakers over the allocation of regulatory responsibilities and investor protection requirements.
Butterfill also warned that Congress may investigate business projects related to Trump, which could divert political attention and further increase scrutiny of the cryptocurrency industry.
At the same time, he noted that a change in congressional control will not automatically reverse the regulatory progress that has already been made.
“The government is still in place, and existing regulatory progress, including GENIUS, will not disappear,” he said.
The GENIUS Act establishes a federal framework for payment stablecoins and is a key component of the regulatory changes introduced during Trump's presidency.
Butterfill expects that the slowdown in legislative progress will affect different sectors of the crypto industry differently.
U.S. exchanges, token issuers, and companies seeking additional regulatory approvals may face greater uncertainty than Bitcoin itself, as Bitcoin is already traded through established investment products and does not rely on the same legislative approvals.
He also believes that established companies with stronger regulatory compliance arrangements may benefit if additional scrutiny falls more heavily on competitors with weaker regulatory practices.
This distinction may also extend to publicly traded crypto companies, which Butterfill expects to be more sensitive to changes in regulatory prospects than Bitcoin.
However, cryptocurrency mining companies with operational data centers may be an exception, as their existing infrastructure could still attract AI hyperscale companies seeking power and computing power.
Dollar, U.S. Treasury yields, and Federal Reserve policy remain key variables for the crypto market.
In addition to cryptocurrency regulation, election results may also alter the financial environment by influencing the dollar, U.S. Treasury yields, and expectations around government spending.
Matthew Ryan, Head of Market Strategy at global financial services firm Ebury, told crypto.news that a Democratic victory could be slightly negative for the U.S. dollar, but he does not believe it would fundamentally alter the dollar’s trajectory.
"We believe the midterm election results are slightly bearish for the dollar, but will not trigger a directional shift," said Ryan.
He explained that a Democratic-controlled Congress may limit Trump’s ability to further increase government spending, thereby easing concerns about the federal deficit and alleviating some of the pressure driving the sell-off of U.S. Treasury bonds.
Lower U.S. Treasury yields may narrow the yield differential between U.S. assets and those of other major economies, while a more stable bond market could reduce demand for the U.S. dollar as a safe-haven asset.
These changes are relevant to the crypto market because fluctuations in dollar liquidity and borrowing costs affect investors' willingness to hold high-risk assets.
However, Ryan warned that large changes in the bond market should not be expected solely based on the election results.
Trump still retains the presidential veto power, and Congress would need a two-thirds majority in both chambers to override it. Ryan believes that while lawmakers can prevent new spending measures from advancing, their ability to reverse already implemented policies is limited.
He also expects U.S. Treasury yields to remain supported by the Iran conflict, the relative resilience of the U.S. economy, and elevated inflation expectations.
“Even if control of Congress changes hands, yields are unlikely to fall significantly as long as the war in Iran continues, the U.S. economy remains solid, and inflation expectations stay elevated,” Ryan said.
Therefore, the Federal Reserve's policy decisions are likely to have a greater impact on the dollar than the results of the midterm elections.
Ryan acknowledged that Democratic control of the Senate could theoretically limit Trump’s ability to appoint more dovish members to the Federal Reserve Board. However, given that only a few vacancies are expected on the Fed’s board before the end of Trump’s term, he believes the practical impact will be limited.
Butterfill also provided a similar assessment of the factors that will influence Bitcoin over the coming months.
“For Bitcoin, real interest rates, dollar liquidity, and ETP flows remain more important than elections,” he said.
He also noted that falling oil prices could help ease inflation expectations, thereby reducing expectations of further interest rate hikes.
Lower inflation pressures could improve the outlook for risk assets if they give the Federal Reserve more room to avoid further monetary tightening.
However, this impact depends on how the economic situation evolves, particularly as geopolitical risks continue to affect energy prices and inflation expectations.
Investors will now turn their attention to the U.S. non-farm payrolls report on Friday, which Ryan considers the next major economic data point following the election.
Employment data may influence market expectations regarding the Fed's next policy move, thereby affecting the direction of the dollar and U.S. Treasury yields.
Can Bitcoin sustain its November rally?
Bitcoin’s historical performance in November also provides another reason for investors to remain cautious about the latest rally.
Although November is traditionally considered a favorable month for Bitcoin, Talos notes that when October performs negatively, Bitcoin’s subsequent November performance has been inconsistent.
Based on historical analysis of the company, in 3 out of the previous 5 instances where October recorded a decline, November also ended with a negative return.
These periods include 2018 and 2025, and in October 2026, Bitcoin fell by 7.4%.
This data shows that when Bitcoin enters November after a period of sustained selling pressure, the historical perception of November being "strong" does not necessarily translate into price gains.
The latest rebound also occurred against the backdrop of continued institutional withdrawals.
As crypto.news reported earlier on November 4, U.S. spot Bitcoin ETFs recorded a net outflow of approximately $115.6 million on November 3, marking the third consecutive trading day of capital outflows.
This brings the total net outflow over the past three trading days to approximately $1.16 billion, indicating that institutional demand has not yet recovered despite Bitcoin's rebound from its election night low.
From a price perspective, after Bitcoin rebounded to around $78,300, the resistance zone at $79,500 has regained attention, followed by the psychological barrier at $80,000.
If prices can sustain these levels, it would strengthen the case for a continued rebound; however, if selling pressure returns, market attention will shift back to the $75,600 to $76,000 range tested during the post-election night decline.
In Butterfill’s view, even if regulatory reforms slow under the new congress, the long-term adoption outlook for institutional investors in crypto assets remains constructive.
He also believes that how Trump responds to the political constraints imposed by the election results is a more unpredictable factor in the industry.
Currently, market attention has shifted from the election itself to economic data, monetary policy expectations, and institutional investment flows—factors that will determine whether Bitcoin can sustain its latest rally.
Disclosure: This article does not constitute investment advice. The content and materials on this page are for educational purposes only.