Cryptocurrencies rebounded on Wednesday after an overnight drop triggered by the Democrats securing control of both houses of the U.S. Congress in the midterm elections. The crypto industry, which had hoped for faster deregulation, faced uncertainty as the political shift could slow progress on crypto-friendly legislation. Despite the initial sell-off, Bitcoin recovered to trade up 0.7% at US$78,354, while Ether gained 1.4% to US$2,323, mirroring a reversal in the broader stock market.
The crypto sector has spent over US$300-million supporting both Democrat and Republican candidates in recent election cycles. Bitcoin's value has plummeted by around 41% since hitting a record high of US$122,000 in October 2025, reducing the total crypto market cap to approximately US$2.61 trillion. Smaller tokens like Sol, Dogecoin, and Ada also saw gains of 1.6% to 2.2%, though they have each lost nearly a quarter of their value in the last month.
The overall crypto market has shed US$300-billion in value over the past month, as investors shifted toward safer assets amid concerns over AI returns and rising borrowing costs. The recent US$6-billion hack of the Binance platform, the largest in crypto history, has further dampened sentiment, leading to significant outflows from Bitcoin ETFs. Tim Sun, a senior researcher at HashKey, noted that investors are reassessing the risks associated with crypto assets, including security infrastructure and potential regulatory delays.
President Donald Trump, a vocal advocate for crypto deregulation, has pushed for lighter enforcement and the creation of a strategic Bitcoin reserve since his return to office. His administration has also introduced measures to facilitate easier access to banking and exchange-traded products, as well as passed a federal stablecoin law aimed at mainstream adoption.