Bitcoin's Midterm Election Risk
The cryptocurrency market is bracing for the upcoming midterm elections in the United States, and history suggests that Bitcoin (BTC) may be vulnerable to a sell-off. According to data from CryptoQuant, profit taking has reached a 2026 high, while traders' unrealized profits have climbed to 33%. This positioning may not be too far-fetched, given the on-chain data.
However, Santiment's latest data sheds some light on why the setup could help Bitcoin. Large shareholder wallets are once again in accumulation mode, with those holding between 10 and 10,000 BTC coins increasing their holdings by 41,025 BTC over the past ten days. This brings the total amount to 13.64 million, or 67.93%, of all BTC coins.
The big players continue to buy, which could support a move toward $90k for Bitcoin in early Q4, in line with the bullish positioning building in the options market. However, the market is sending a clear signal: Bitcoin's correction is a liquidity story. For Bitcoin to fall below $83,000, along with higher Treasury yields, a stronger dollar, higher oil prices, and renewed geopolitical tensions, would indicate tighter financial conditions and less liquidity in the market.
Utkarsh Ahuja, Founder and Managing Partner at Moon Pursuit Capital, explained that if investors can earn more than 5% on a 10-year US Treasury, riskier assets have to compensate for taking on additional risks. The same calculation applies across portfolios. Higher yields increase the appeal of safer assets, which tends to suppress riskier assets such as Bitcoin, particularly when liquidity is already tight and leverage across the board is expanding.
The recent jobs report could act as a bullish catalyst, adding some credibility to Bitcoin's potential $90k+ breakout. However, there's a catch: with liquidity already being a concern, spot demand still weak, and speculative activity rising, can tokenization alone provide enough liquidity 'momentum' to the crypto market to continue its upward trajectory?
The RWA boom is bullish for DeFi, but there's a catch. Tokenization plays an important role in it. The RWA sector reached over $38 billion in on-chain assets, with millions of holders in tokenized markets. However, Ahuja warned that the trend should be looked at separately from Bitcoin's short-term price movement.
A mid-Q4 crash cannot be ignored given the setup and historical trends. Bitcoin appears to be in a textbook accumulation phase with STHs slowly sliding into LTH holders. However, history adds a risk factor: the U.S. midterm elections are just one month away, and $BTC's performance following previous midterms is difficult to dismiss.