Bitcoin climbed back above $80,000 for the first time since Binance's record hack, even as Democrats took control of Congress. Analysts point to fading seller pressure, but weak demand and a mixed post-midterm history temper the recovery.
Bitcoin surged more than 5% from its election-night low to reclaim $80,000. The move extends a recovery from approximately $75,600 on Wednesday and shrugs off concerns that a Democratic Congress would undermine President Donald Trump's crypto-friendly agenda.
According to CoinGlass data, the rally liquidated $453.32 million in the past hour, with most losses coming from short traders. Those losses reach $913.34 million over the past 24 hours.
Analysts see relief, not a political shock
The rally comes less than a week after Binance suffered a $6.34 billion security breach. James Butterfill, head of research at CoinShares, told CryptoSlate that the Democratic sweep had largely been priced in before the election, leaving room for a relief rally.
Butterfill expects Democratic control to complicate the CLARITY Act, while potential investigations into Trump-linked crypto businesses could divert attention from regulatory reform. He argued that exchanges, token issuers and other companies needing new regulatory permissions would be more vulnerable than Bitcoin, whose direction remains more closely tied to real yields, dollar liquidity and exchange-traded product flows.
Talos data shows Bitcoin's DVOL, a gauge of expected volatility, declined 6%, while Wall Street's VIX fell 10%.
Sellers tire, but buyers have not returned
CryptoQuant analyst Darkfost said the firm's seller exhaustion model has fallen to levels historically associated with bear-market lows. The indicator offers no assurance that prices will immediately recover.
Demand is the missing piece. Darkfost noted that buyers have yet to show the conviction of the sellers who exited, and US spot Bitcoin ETFs have recorded three consecutive trading sessions of withdrawals.
Post-midterm gains hid significant losses
CryptoQuant data shows Bitcoin has risen over the subsequent 12 months in all four election cycles since 2010, with a median return of 63%. But buyers right after the votes faced a 49.7% plunge within approximately six weeks of the 2018 election, a 39.8% drawdown after 2014 and an 18.5% decline after 2022.
This cycle also starts differently. Bitcoin entered Tuesday's election with a 20.4% gain over the preceding three months, compared with losses of 44% in 2014, 8.3% in 2018 and 16.5% in 2022. Each election since 2010 also fell about 17 to 25 months before the next halving.
Kelly Ye, Talos' head of research, cautioned against extrapolating the relief rally. According to Ye: "First reactions aren't always the right ones."
Source: CryptoSlate
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