Crypto market outlook after US midterms, will Bitcoin reclaim $80,000?

The cryptocurrency market recovered from an initial selloff following the US midterm elections, as Bitcoin climbed back above $78,000 and investors turned their attention to what a Democratic-controlled Congress could mean for digital assets.

While the election results could slow progress on crypto legislation, market analysts who shared their views with crypto.news believe Bitcoin’s next move will depend more on macroeconomic conditions, institutional fund flows and the Federal Reserve’s monetary policy than on the political changes in Washington.

According to crypto.news price data, Bitcoin recovered to approximately $78,300 on November 4 after briefly falling towards $75,600 during the election results. The cryptocurrency had initially come under pressure as Democrats secured control of both the House of Representatives and the Senate, leaving President Donald Trump to work with an opposition-controlled Congress for the remainder of his term.

The recovery was accompanied by a decline in market volatility and a rebound in equity futures, although analysts cautioned that the initial reaction to the election results may not necessarily determine where prices head next.

Bitcoin relief rally follows US midterm results

James Butterfill, Head of Research at CoinShares, told crypto.news that Bitcoin appeared to have already accounted for the possibility of a Democratic sweep before the election results were confirmed.

“My sense is that Bitcoin had largely priced in a Democratic sweep, leaving room for a relief rally as uncertainty clears,” Butterfill said.

He added that the anticipated result did not necessarily mean another selloff was imminent, particularly as investors had already adjusted their positions ahead of the vote.

Data shared with crypto.news by institutional digital asset trading platform Talos showed that the market’s immediate response was accompanied by a sharp decline in expected volatility.

Bitcoin’s DVOL index, which measures implied volatility in the cryptocurrency’s options market, fell 6%, while the Cboe Volatility Index, commonly known as the VIX, declined 10%.

Kelly Ye, Head of Research at Talos, said the election results were priced into prediction markets relatively quickly, even though the settlement of individual contracts would take longer.

“Prediction markets priced the midterm outcome within hours, even though settlement will take longer, and traditional markets followed with relief,” Ye told crypto.news.

According to Talos, prices on Kalshi and Polymarket’s non-US platform converged rapidly as the results became clearer. The two platforms have different settlement procedures, which means the time taken to settle contracts may differ even when their market prices have already adjusted to the outcome.

The recovery also extended into decentralised derivatives markets, where traders were able to respond to developments overnight before traditional US equity markets reopened.

Talos reported that Hyperliquid’s perpetual futures tracking the Nasdaq 100 and S&P 500 reversed their election-night losses after reaching lows around 9 pm to 10 pm ET.

The QQQ and SPY proxies subsequently recovered approximately 3.0 and 2.2 points, respectively, from their 10 pm lows and ended the overnight session in positive territory.

Meanwhile, the corresponding cash exchange-traded funds could not respond in the same way while regular trading was closed, with premarket activity beginning at 4 am ET.

Trading volumes also showed a substantial difference between perpetual futures and tokenised spot markets.

According to Talos, Hyperliquid’s XYZ100 and SP500 perpetual futures recorded a combined $848 million in trading volume overnight, compared with approximately $10.5 million across all tokenised spot venues.

That placed perpetual futures volumes at roughly 81 times those of tokenised spot markets during the period.

The XYZ100 contract traded at approximately 5.4 times its typical hourly volume, while SP500 activity reached about 6.3 times its usual level.

Ye said the figures showed that traders preferred perpetual futures when seeking exposure to major market events, particularly when conventional equity markets were closed.

Talos also attributed part of the overnight recovery to systematic and commodity trading adviser buying, as lower volatility, reduced downside hedging demand and previously underweight positions encouraged traders to increase their exposure.

Nevertheless, Ye cautioned that “first reactions aren’t always the right ones,” suggesting that the market’s initial recovery should not automatically be treated as confirmation of a sustained upward trend.

Crypto regulation faces a tougher path under Democratic Congress

Although the immediate market reaction has been relatively positive, the longer-term implications of the election results could be more complicated for the cryptocurrency industry.

Butterfill identified slower regulatory reform as one of the principal concerns following the Democratic sweep, particularly for companies that depend on new legislation to expand their operations.

“The greater concern is slower crypto reform. CLARITY faces a harder path,” he said.

The CLARITY Act, which seeks to establish a clearer regulatory framework for digital asset markets in the United States, has been a major legislative priority for the cryptocurrency industry.

With Democrats now controlling both chambers of Congress, the prospects for advancing the legislation could become more difficult, particularly if lawmakers disagree over the division of regulatory responsibilities and the protections required for investors.

Butterfill also warned that potential congressional investigations into Trump-linked business ventures could occupy political attention and produce further scrutiny of the cryptocurrency industry.

At the same time, he noted that the change in congressional control would not automatically reverse regulatory developments that had already taken place.

“The administration remains in place, and existing regulatory progress, including GENIUS, does not simply disappear,” he said.

The GENIUS Act established a federal framework for payment stablecoins, making it an important part of the regulatory changes introduced during Trump’s presidency.

Butterfill expects the consequences of slower legislative progress to differ across the cryptocurrency sector.

US exchanges, token issuers and companies seeking additional regulatory permissions could face greater uncertainty than Bitcoin itself, which is already traded through established investment products and does not depend on the same legislative approvals.

He also suggested that established businesses with stronger compliance arrangements could benefit if additional scrutiny falls more heavily on competitors with weaker regulatory practices.

The distinction could extend to publicly traded cryptocurrency companies, which Butterfill expects to be more sensitive to changes in the regulatory outlook than Bitcoin.

Crypto miners with operational data centres may be an exception, as their existing infrastructure could continue attracting interest from artificial intelligence hyperscalers seeking access to power and computing capacity.

Dollar, Treasury yields and Fed policy remain important for crypto

Beyond cryptocurrency regulation, the election results could also influence financial conditions through their effect on the US dollar, Treasury yields and government spending expectations.

Matthew Ryan, Head of Market Strategy at global financial services firm Ebury, told crypto.news that the Democratic victory was likely to be mildly negative for the dollar, although he did not expect it to fundamentally change the currency’s direction.

“We see the outcome of the midterms as mildly bearish for the dollar, though not the instigator of a directional change,” Ryan said.

He explained that a Democratic-controlled Congress could restrict Trump’s ability to pursue additional fiscal expansion, potentially reducing concerns over the federal deficit and easing some of the pressure that has contributed to the selloff in US government bonds.

Lower Treasury yields could narrow the interest rate advantage that US assets currently offer over those in other major economies, while more stable bond markets could reduce demand for the dollar as a safe-haven asset.

Such developments would be relevant to cryptocurrency markets because changes in dollar liquidity and borrowing costs can influence investors’ willingness to hold riskier assets.

Nevertheless, Ryan cautioned against expecting a substantial shift in the bond market solely because of the election results.

Trump retains his presidential veto, and Congress would need a two-thirds majority in both chambers to override it. Ryan argued that while lawmakers could prevent additional spending measures from advancing, they would have limited ability to reverse policies already in place.

He also expects Treasury yields to remain supported by the ongoing Iran war, relatively resilient US economic activity and elevated inflation expectations.

“Even with Congress changing hands, yields are unlikely to fall far while the Iran war drags on, the US economy stays solid and inflation expectations remain high,” Ryan said.

The Federal Reserve’s policy decisions are therefore likely to remain a more important influence on the dollar than the midterm results.

Ryan acknowledged that Democratic control of the Senate could theoretically limit Trump’s ability to appoint more dovish Federal Reserve governors. However, with relatively few vacancies expected on the central bank’s board before the end of Trump’s term, he considers the practical consequences limited.

Butterfill offered a similar assessment of the factors likely to influence Bitcoin over the coming months.

“For Bitcoin, real yields, dollar liquidity and ETP flows still carry more weight than the elections,” he said.

He also pointed to falling oil prices as a possible source of relief for inflation expectations, which could moderate expectations for further interest rate increases.

Lower inflationary pressure could improve the outlook for risk assets if it gives the Federal Reserve more room to avoid additional monetary tightening.

Still, the effect will depend on how economic conditions develop, particularly with geopolitical risks continuing to influence energy prices and inflation expectations.

Investors will now turn their attention to Friday’s US nonfarm payrolls report, which Ryan identified as the next important economic release following the election.

The employment figures could influence expectations for the Federal Reserve’s next policy decisions and, consequently, the direction of the dollar and Treasury yields.

Can Bitcoin maintain its November recovery?

Bitcoin’s historical performance in November offers another reason for investors to approach the latest rebound with some caution.

Although November has traditionally been regarded as a favourable month for Bitcoin, Talos noted that the cryptocurrency’s performance following a negative October has been less consistent.

According to the firm’s historical analysis, November has also ended in negative territory in three of the five previous instances when October recorded a loss.

Those periods included 2018 and 2025, while October 2026 ended with Bitcoin down 7.4%.

The figures suggest that November’s historically positive reputation does not necessarily translate into gains when Bitcoin enters the month following a prolonged period of selling pressure.

The latest recovery also comes against a backdrop of continued institutional withdrawals.

As crypto.news reported earlier on November 4, US spot Bitcoin exchange-traded funds recorded approximately $115.6 million in net outflows on November 3, extending their losing streak to three consecutive trading sessions.

The withdrawals brought total net outflows over those three sessions to approximately $1.16 billion, suggesting that institutional demand had not yet recovered despite Bitcoin’s rebound from its election-night lows.

From a price perspective, Bitcoin’s recovery towards $78,300 has brought the $79,500 resistance area back into focus, followed by the psychological $80,000 level.

A sustained move above those levels could strengthen the case for a continued recovery, while renewed selling pressure would bring attention back to the $75,600 to $76,000 region tested during the election-night decline.

For Butterfill, the longer-term outlook for institutional cryptocurrency adoption remains constructive, even if the pace of regulatory reform slows under the new Congress.

He also identified Trump’s response to the political constraints imposed by the election results as a less predictable factor for the industry.

For now, the immediate focus is shifting away from the election itself and towards the economic data, monetary policy expectations and institutional investment flows that will determine whether Bitcoin can build on its latest recovery.