According to Woofun AI, the balance of victory and loss in the US midterm elections has been skewed towards the Democratic Party, but this political pattern has not disrupted the Bitcoin market as drastically as expected by the market. Trading data on prediction platform Polymarket revealed that as of September 28, the Democratic Party had a 61% chance of winning control of both houses.
However, the key variable that determined market sentiment was not the election itself, but Bitcoin rebounded after the US Senate vetoed the Digital Asset Market Clarity Act (CLARITY Act) on September 15. This counterintuitive market reaction shows that the stagnation in the legislative process has not constituted a substantial disadvantage, and the core conflict has moved from regulatory uncertainty to suppression of macro-monetary policies.
Notably, despite the Democratic Party's dominance in the election, Bitcoin's price anchor appears to have moved away from the Capitol Hill game and has instead closely followed fluctuations in the Federal Reserve's interest rate decisions.
The details of the regulatory game behind the legislative impasse are more complicated. As a key decision-making body, the US Senate's veto directly blocked attempts to clarify the regulatory ownership of different tokens. The bill aims to clarify the responsibilities of regulators, but despite strong opposition from Massachusetts Democratic Senator Elizabeth Warren, leader of the Senate Banking Committee, the proposal did not win approval from any Democrats, even though the proposed 126 amendments were made as required.
According to data compiled by Woofun AI, the current regulatory environment is fragmented: the US Securities and Exchange Commission (SEC) and the US Commodity Futures Trading Commission are still each advancing regulatory work, and the US President is also accused of receiving more than 1 billion US dollars in capital from the cryptocurrency industry. To relaunch the bill, Republicans must make substantial concessions on moral codes and stablecoin yields.
This stagnation at the legislative level and the parallel advancement of regulators poses a structural dilemma facing the current market, forcing industry participants to face a reality where there is no uniform legal framework but where regulatory pressure continues.
By contrast, the dominance of monetary policy is more prominent. The Federal Reserve announced on September 16 that it would raise the policy interest rate to the 3.75%-4% range. This move directly tightened liquidity. Of the 18 Federal Reserve officials, 16 expect another rate hike this year, which means the strict monetary policy environment is likely to continue. For investors, the impact of legislative barriers is far less than the increase in capital costs due to interest rate hikes. As early as March, the SEC characterized Bitcoin as a digital commodity with the support of the US Commodity Futures Trading Commission, but this characterization is not irreversible, and regulators may change their findings in the future, causing long-term stability risks.
Meanwhile, the cryptocurrency industry isn't passively waiting, and the Fairshake Political Action Committee launched a $30 million advertising campaign aimed at stopping Ohio Democrat Sherrod Brown from taking back his seat in the Senate.
Although this industry counterattack is symbolic, it is difficult to offset the depressing effect of rising macro interest rates on asset prices. If Bitcoin fails to maintain its current rise, the Fed's policy influence will be further highlighted; conversely, it indicates that the market's tolerance for high interest rates is increasing.
Looking ahead, the November 3 election results may not be as decisive as the rise in borrowing costs. The expectations of Federal Reserve officials for further interest rate hikes have made monetary policy the core force that dominates Bitcoin's trend. What is uncertain is whether traders will see the Democratic Party's control of the US Senate as a threat or just an established fact. Regardless of the election results, the legislative impasse will be difficult to break in the short term, while the cycle of monetary policy tightening continues. For market participants, the focus should shift from political games to macroeconomic indicators, particularly changes in interest rate paths. Bitcoin's long-term stability depends on whether it can maintain its resilience under the double clash of high-pressure regulation and monetary tightening, rather than simply relying on a political party's ruling advantage.
This trend shows that the cryptocurrency market is maturing, and its price discovery mechanism is more dependent on global liquidity conditions than on political events in a single country.