Bitcoin recovered on Wednesday after Democrats secured control of both chambers of Congress in the U.S. midterm elections. Bitcoin reached $78,354 early Wednesday after touching a six-week low. Bitcoin also rebounded to slightly above $80,000, exceeding the cryptocurrency's average price over the preceding 50 days, a bullish signal after weeks of correction. Ethereum traded at $2,323 early Wednesday. Ethereum also climbed 7% to $2,434.
The recovery appears to reflect an expected technical rebound rather than a reversal of the market trend or buying driven by fear of missing out. U.S. stock futures also recovered as the overnight crypto selloff reversed, making politics alone an uncertain explanation for the rebound. U.S. stocks gained around 1.6% overall. The Dow Jones Industrial Average led the gains with a 2.5% increase. Analysts said crypto prices had largely reflected expectations of a Democratic sweep before election night. Bitcoin's rebound therefore indicates how much negative news investors had anticipated more than enthusiasm for the election outcome.
The crypto industry spent more than $300 million backing candidates favorable to crypto from both parties during the 2024 and 2026 election cycles. Industry spending reached about $176 million across more than 100 races this year. The spending partly sought legislation establishing clearer operating rules for digital asset businesses. The Clarity Act would specify federal regulators' responsibilities for different crypto assets and trading activities.
The Senate voted 49-50 against advancing the Clarity Act in September, below the 60 votes required to clear a procedural obstacle. The procedural defeat prevented full debate but did not constitute a final decision on the bill. Negotiators had already disagreed over limits on government officials' crypto business interests and rules for rewards on stablecoins, which are tokens intended to maintain a fixed value. President Donald Trump's personal and family crypto businesses became a particular source of disagreement for Democratic lawmakers.
Democratic control makes a rapid revival of the same legislative agreement less likely. However, the election does not automatically reverse the industry's gains under Trump. The Trump administration has relaxed enforcement, created a strategic Bitcoin reserve and overseen enactment of a federal stablecoin law. The legislative outlook matters more to exchanges, token issuers and other businesses seeking explicit legal permissions than to Bitcoin's daily price movements. Analysts said liquidity, interest rates and investment flows remain stronger influences on Bitcoin.
The overall crypto market lost roughly $300 billion over the past month, reducing total market value to about $2.67 trillion. Higher borrowing costs and concerns about returns from artificial intelligence investments have encouraged traders to favor lower-risk assets such as bonds or gold. Hacks and investment outflows have also pressured the crypto market. Major Bitcoin exchange-traded funds, which provide Bitcoin exposure through conventional brokerage accounts, registered net withdrawals of $215 million in October. Those withdrawals increased year-to-date net outflows to $1.84 billion.
The incoming Congress begins work in January 2027. The industry will have to pursue new legislation under Democratic control of both chambers unless lawmakers revive the Clarity Act before the current session closes.