In the U.S. midterm elections, the Democratic Party won control of both the House of Representatives and the Senate, delivering a major political setback to President Donald Trump.
Experts say this is not an "ideal outcome" for the crypto market and increases uncertainty around future crypto-friendly policies. However, after a brief dip, Bitcoin rose 1.6% over the past 24 hours to $78,277, according to Decrypt data. Overall, nearly all of the top 100 cryptocurrencies by market cap rose on the day.
Bitwise Europe Research Director André Dragosch told Decrypt: “I believe the Democratic sweep was largely priced in by the market well before the midterm elections. Given that market sentiment was already extremely pessimistic and signs of selling exhaustion were emerging, the downside risk from these midterms was quite limited. Therefore, it’s not surprising to see this intraday V-shaped rebound during the election period.”
At the beginning of this week, Polymarket gave a 65.5% probability that the Democratic Party would win control of both the House and the Senate. Dragosch said this probability indicates the market was not surprised by Tuesday’s outcome.
James Butterfill, Head of Research at CoinShares, also agrees. He told Decrypt, “My sense is that Bitcoin has largely priced in the outcome of a Democratic sweep, so once uncertainty fades, there is still room for a relief rally. Therefore, the expected outcome doesn’t necessarily trigger a new wave of selling.”
Heslin Kim, co-founder and CBO of Zenith, told Decrypt: “Crypto policy did not decide the midterm elections. The economy, oil prices, the situation in Iran, and Trump’s unfulfilled promises were key. Crypto policy is not important to the broader electorate, but now it’s burdened with the negative associations stemming from activities linked to the Trump family within our ecosystem.”
HashKey senior analyst Tim Sun told Decrypt that this outcome "certainly increases uncertainty around the advancement of crypto policy," but Bitcoin's price movement suggests the market did not interpret it as a "major negative catalyst."
Dragosch said one reason may be that the midterm election results do not mean the Democratic Party can overturn the existing favorable crypto guidance already set by the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). However, Sun added that this also means the market can no longer rely on Trump’s “political tailwinds” to drive price movements as it once did.
This also makes the prospects of the Clarity Act more complex. The bill, which aims to establish rules for the crypto market, has been stalled since its introduction in 2025, partly because many Democrats oppose it due to Trump’s conflicts of interest in the crypto space.
BitOK CEO Dmitry Machikhin predicted in a statement shared with Decrypt that the Clarity Act may remain stalled until 2027 due to the outcomes of the midterm elections.
Butterfill said: “The greater concern is a slowdown in crypto reform. CLARITY faces a more difficult path forward, and investigations into Trump-related businesses could consume political capital and generate unsettling headlines across the industry. However, the current administration remains in power, and existing regulatory progress, including GENIUS, will not simply disappear.”
He expects U.S. exchanges, token issuers, and businesses reliant on new regulatory approvals to be more sensitive to this outcome; if regulatory scrutiny falls more heavily on weaker competitors, established and compliant operators may even benefit.
Marcin Kaźmierczak, Co-founder and COO of RedStone, told Decrypt: “A Democratic-controlled Congress could, to some extent, even benefit the industry. Cryptocurrency should not rely on any single political party. Infrastructure must function effectively for whoever is in power and deliver maximum value to ecosystem participants. Finance is changing, and politics won’t stop that.”
Despite changes in control of the House and Senate, Dragosch expects little change over the next two years.
When asked if the Clarity Act will be signed into law by 2026, he said, “Personally, I expect more controversy, more divergence, and, quite simply, more of this ‘train can’t be stopped’ sentiment.” He noted the lack of meaningful progress on curbing fiscal deficits. “We’ll likely remain in a fiscally dominant environment with rising fiscal risks, and I believe this will ultimately become a tailwind for hard assets like Bitcoin.”
In contrast, he believes macro factors "still dominate for now." He specifically noted that the Federal Reserve may soon shift to address the "rising risks" surrounding AI trading.
Dragosch said: “This is likely to reignite market interest in depreciation-resistant assets like Bitcoin and continue driving institutional adoption through ETPs and treasury companies.”
Butterfill also mentioned macroeconomic factors, saying, “For Bitcoin, real yields, dollar liquidity, and ETP flows remain more important than elections. I’m lowering my expectations for the pace of U.S. reforms, but I remain optimistic about institutional adoption. How Trump will respond after being constrained is the harder part to predict.”