Author: Matt Hougan, Chief Investment Officer at Bitwise

Translated by: Deep Tide TechFlow

Deep Tide Editor’s Note: The “blue wave” sparked by the U.S. midterm elections gave Democrats control of both chambers of Congress, prompting market concerns that crypto regulations would tighten again. But Bitwise Chief Investment Officer Matt Hougan points out that the election did not change the balance of pro-crypto seats in Congress: supporters of crypto still hold a majority in both the new House and Senate.

In his view, the long-term direction of the industry is shaped not by shifts in party control, but by the increasingly younger generational makeup of Congress. Newly elected senators are 14 years younger on average, and at least 94 Gen Z and Millennial lawmakers have entered the House of Representatives. Although short-term political developments may cause volatility, major sectors such as Bitcoin and stablecoins remain resilient.

Congress has turned “blue,” but there are fewer “gray hairs,” too.

Politics has always been a high-voltage wire best left untouched. But today, let’s talk politics—at least the parts directly related to cryptocurrency.

The “blue wave” that swept across the United States in last week’s midterm elections gave Democrats control of both chambers of Congress. Democrats flipped at least 7 Senate seats (and may ultimately reach 9), and they also reclaimed a substantial number of seats in the House.

Massachusetts Democratic Senator Elizabeth Warren, who made a name for herself by building an “anti-crypto army,” is now highly likely to become the next chair of the powerful Senate Banking Committee, with the authority to launch investigations into any area she focuses on.

You might think this is an absolute disaster for cryptocurrency. And in the short term—that is, over the next few weeks—I also believe the market will see real turbulence as investors worry about the policies Democrats might pursue now that they hold power.

But looking further ahead, I’m not worried. In fact, I believe any pullback driven by election sentiment will most likely be a buying opportunity. This isn’t blind optimism or wishful thinking on my part; I have hard data to back it up.

Demographics are the great political equalizer

Let’s start with a surprising fact: although last week’s election dramatically reshaped the balance of power between Democrats and Republicans, it barely shifted the balance between the pro-crypto and anti-crypto factions in Congress.

According to data from the crypto advocacy group Stand With Crypto, the new Congress will include 51 “pro-crypto” senators—that is, lawmakers who received an “A” or “B” rating on crypto policy issues. By comparison, the previous Congress had 52. This is hardly a “tidal wave” of change.

As for the House, although vote counts have yet to be finalized in many districts, Stand With Crypto has confirmed at least 241 pro-crypto lawmakers. That’s a solid majority of the 425 representatives counted so far.

You might be wondering: “Wait, what? I remember the previous Democratic administration being openly hostile to cryptocurrency. Wasn’t the blue wave supposed to be unequivocally bad news?”

But the key point is that last week’s election wasn’t just a political wave; it was a demographic wave, too. The data shows that newly elected senators are, on average, a full 14 years younger than the senators leaving office. The number of senators under 50 nearly doubled, rising from 8 to 15. In addition, the new House will include at least 94 Gen Z or millennial lawmakers, a sharp increase from the previous Congress.

In other words, Congress has indeed turned “blue,” but there are fewer “gray hairs,” too.

People often underestimate how important generational demographics are to cryptocurrency adoption. As people get older, they accumulate more wealth and gain greater influence. They then begin taking leadership roles in major institutions—and, on average, they’re more comfortable with the technologies they grew up with.

That’s why, according to a recent Charles Schwab survey, millennials are more than four times as likely to own cryptocurrency (33%) as baby boomers (8%).

Take James Talarico, the newly elected Democratic senator from Texas. At just 37, he will become the youngest senator in the country when he is sworn in next January.

Bitcoin has been a constant throughout nearly all of Talarico’s career. Unsurprisingly, he received an A rating from Stand With Crypto. During his time in the Texas Legislature, he also voted twice in support of establishing a strategic Bitcoin reserve for Texas.

Of course, that doesn’t mean cryptocurrency will have smooth sailing under a Democratic-led Congress. I expect a wave of high-profile investigations into Trump-linked ventures such as Trumpcoin and World Liberty Financial, and areas like prediction markets will face new regulatory risks.

As I said earlier, the market may have a rough ride over the coming weeks and even months. But for the core areas that truly represent the mainstream of cryptocurrency—Bitcoin, stablecoins, and asset tokenization—I believe the overall outlook remains solid. As the saying goes, demographics are destiny.