U.S. Midterms Drive Bearish Sentiments Among Crypto Traders

Crypto investors have turned bearish in recent days amid expectations that Republicans could lose control of Congress.

Crypto intelligence firm Santiment disclosed this in a post on X, noting that the crowd was bullish on the Midterms Election just two weeks ago.

According to Santiment, discussions about the U.S. midterms have increased significantly as Election Day approaches. However, concerns about the potential shift in political power have also increased.

Crypto Investors Favor Republican Control Even as U.S. Midterms Odds Suggest Democrat Takeover

The bearish sentiment signals the broad belief among crypto investors that Republican control of Congress is better for the industry. This is not surprising given the series of pro-crypto efforts by the Trump administration since 2025.

As Santiment analysts noted, crypto traders now see Republicans as more crypto-friendly and are concerned about what could change if Democrats take control of Congress.

Presently, Republicans maintain control of both the Senate and the House, although by narrow margins. However, most polls have predicted that Democrats will take control of the House in the midterms while the Senate remains up for grabs.

Prediction market odds also support this position. Polymarket has Democrats at a 76% chance of taking over the Senate and a 94% chance of winning the House.  Kalshi also has similar odds.

Republicans losing control of Congress could hurt any attempt to pass pro-crypto legislation in the second half of the Trump presidency. It could also mean democrats chair the major committees, including those that oversee the crypto industry. 

Stakeholders in the industry were already concerned about this eventuality, with Crypto Super PAC Fairshakes raising around $200 million to support pro-crypto candidates in this election.

In the lead-up to the Clarity Act, which failed to pass the Senate in September, supporters of the bill warned that its failure could mark the end of the legislation.

Bitcoin Struggles as Market Slowdown Continues

Meanwhile, the bearish sentiment among crypto traders comes at a time when Bitcoin and the broader crypto market are struggling. With the $6.3 billion Binance exploit already pushing BTC below $80,000, traders’ sentiment suggests it could remain in that range for longer. 

The flagship asset is currently trading around $76,500 despite briefly rising close to $78,000 on Tuesday. It is now down 5% in the past week amid weak demand and sustained liquidation. 

Bitcoin’s struggle has also spread to the rest of the market, with the Crypto Fear & Greed Index now at 33/100, deep inside the Fear territory. This is the lowest it has been since August.

Meanwhile, Santiment experts believe the current bearishness could be a catalyst for Bitcoin recovery. Historically, the asset has performed contrary to crowd sentiment, turning extreme bearishness into a counter-signal.

The analysts believe that Bitcoin needs to maintain its current price level for that counter signal to hold through. They wrote, "If BTC holds roughly $76.5K to $77K while election fear stays elevated, the odds of a relief rally improve. A reclaim of $79K would strengthen that signal."

However, they warned that further decline could reinforce current sentiment, exposing Bitcoin to more price volatility.