Bitcoin Falls to $75,700, Then Recovers as Congressional Election Outcome Becomes Clear
Key Facts
Bitcoin briefly fell to about $75,700 in trading on November 4, before recovering to about $76,700 during the Asian morning, according to CoinDesk. The decline came as early results pointed to a possible Democratic victory in both chambers of Congress in the U.S. midterm elections. Market data later showed a broader recovery, with the cryptocurrency up 1.8% at $77,919.7 by 06:48 GMT, according to Investing.com. That price remained below the $78,000 level cited in market reports and was not a closing price for the day. The moves followed the November 3 elections, as changing expectations about political control in Washington became a focus in explanations of the volatility.
The Associated Press reported that Democrats won control of Congress, flipping at least 7 Senate seats. In the House, the party flipped more than 20 districts, according to the news agency. The founder of TDX Strategies said Bitcoin initially fell in response to a Democratic sweep, then recovered as the outcome became clear and political uncertainty eased. He added that "a clear result dispels political uncertainty." The move coincided with U.S. futures and Asian stocks recovering from their initial losses, a shift that Investing.com cited in its account of Wednesday trading. The effects of changing political expectations thus overlapped with a broader recovery in markets during the session.
The election outcome carries mixed implications for legislation related to digital assets, according to CoinDesk. A Congress controlled by Democrats is generally seen as less inclined toward cryptocurrency-friendly legislation. At the same time, a divided government could make major policy shifts that harm the market less likely. A Capital Economics analyst said a Democratic victory does little to change the near-term policy outlook. The analyst attributed this to the party lacking a Senate majority sufficient to overcome legislative filibusters, and to the president’s ability to veto legislation. Markets, according to an Associated Press report, have generally tended to favor divided control of Washington between Republicans and Democrats, as this is seen as reducing the risk of sweeping policy changes.
The options market saw notable activity on Election Day, according to CoinDesk, with Bitcoin options blocks worth about $660 million in notional value traded on November 3. The volume was more than double that recorded the previous day. The flows included about $420 million in call option buying, compared with about $105 million in call option selling. These figures reflect a difference between option purchases and sales in that session, without determining the subsequent price direction on their own. The options activity was among the trading details accompanying Bitcoin’s volatility around the election. Its timing also distinguishes it from the cryptocurrency’s decline and recovery in trading on November 4.
Before the election, the cryptocurrency sector spent more than $300 million to support pro-crypto candidates from both parties during the current and previous election cycles, according to Reuters in a report carried by Investing.com. The administration of President Donald Trump has overseen sweeping reforms in the sector, according to an earlier Reuters review, including easing enforcement, creating a strategic Bitcoin reserve and enacting a federal stablecoin law. This backdrop places the congressional election outcome within an ongoing debate over the direction of U.S. policy toward digital assets. An earlier Reuters review, based on Ned Davis Research data, also showed that the S&P 500 posted median gains of 1.4% from Election Day through year-end in 8 midterm cycles since 1930 in which the president’s party lost control of the House. That figure concerns the index’s performance in those historical cycles and does not describe Bitcoin’s movement in Wednesday’s session.
On the cryptocurrency’s near-term outlook, Markus Thielen of 10x Research said Bitcoin appeared oversold on the daily momentum indicator and said it could rise toward $82,000. This is an analyst estimate published on November 4, not a market price that was reached. His view came after the cryptocurrency fell to its lowest level in more than a month in the previous session, according to Investing.com, before recovering in Wednesday trading. The source did not give a specific date for reaching that level. The documented session move remained Bitcoin’s 1.8% rise to $77,919.7 by 06:48 GMT, as the impact of the election outcome on policy and market expectations continued to be watched.