The U.S. midterm elections took place on November 3. By the early hours of November 4, the final results had not all been confirmed, but early vote counts favored the Democrats. Kalshi put the odds at about 90% for the Senate and 97% for the House.
The market’s initial reaction wasn’t pretty. BTC surged to 77,965 intraday on November 3 before pulling back, briefly touching 76,500 and testing the September low again. More than $200 million in long positions were liquidated that day. The Fear & Greed Index stood at 34, up from its previous reading of 26. Spot ETFs saw net outflows of about $1.04 billion over the two trading days of October 30 and November 2, suggesting institutions were clearly staying on the sidelines ahead of the election.
The concern is straightforward: if the Democrats win control of both chambers, progress on the regulatory legislation the industry has been hoping for (the CLARITY Act already stalled in the Senate in September) could slow further, and crypto companies may face stricter regulation.
Historical data also tells another story. Binance Research found that BTC rose an average of about 54% after past midterm elections. CNBC reported that the S&P 500 rose in the year following all 11 midterm elections from 1982 to 2022, gaining an average of 13.7%. The sample is small, so this is no guarantee—especially since this time the backdrop includes an interest-rate hike cycle and a pullback in AI valuations, making it different from previous periods.
My take has two parts:
In the short term, watch the November 6 jobs report and ETF flows. If 76,000 doesn’t hold, 75,000 is the next stop. In the medium term, watch the inflation data ahead of the December 9 FOMC meeting.
The election is more about removing uncertainty than setting the direction itself.
What do you think: will the market move up now that the bad news is out, or dip to 75,000 first? Pick a side in the comments.
$BTC