Bitcoin After the Midterms: 21shares and CoinShares on ETF Outflows, the CLARITY Act and Rates

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The election is over, the uncertainty is gone, and Bitcoin is still missing the one thing that matters most: buyers.

The crypto market initially reacted to the Democratic sweep in the US midterms with a dip, Bitcoin fell to around 75,600 dollars on election night before climbing back above 80,000 dollars on Wednesday. Two of Europe’s largest crypto ETP issuers have analyzed the situation in their market commentaries, and both reach a similar conclusion: the result was priced in, the recovery came from the end of uncertainty and from short covering, and the real test is still ahead.

21shares: “The Election Brought No New Buyers”

Adrian Fritz, Chief Investment Strategist at 21shares, focuses on capital flows. The most important group of Bitcoin buyers in recent years, the US spot ETFs, is holding back: after inflows of 2.6 billion dollars in September, the funds recorded net outflows of around 290 million dollars in October. In the five trading days up to election day, outflows totaled around 1.07 billion dollars according to data from Trader T, the most since early July. On the day after the election, a net 75 million dollars flowed in for the first time in three sessions, but BlackRock’s IBIT, the largest fund, lost around 200 million dollars at the same time. “The election removed an uncertainty but brought no new buyers,” Fritz says.

For him, one threshold is decisive: the average entry price of ETF investors is around 82,000 dollars, just above the current price. “Whether these investors sell or add when they reach their break-even point is, in our view, the most important indicator for the coming weeks.” Bitcoin treasury companies, which have bought large amounts recently, are also under pressure with an average entry price of around 80,000 dollars, and on November 11 index provider MSCI decides whether companies like Strategy are removed from its indices, which could slow their further purchases. In the derivatives market, leverage has been building up again while demand for downside protection has risen. “Price gains that stem mainly from short covering are no substitute for sustainable demand.” Fritz’s scenario: if stable ETF inflows return and Bitcoin breaks 82,000 dollars, the picture brightens considerably. If the price falls back below the 76,000 to 78,000 dollar zone, a test of the 200-day moving average at around 73,000 dollars becomes likely. In between lie the US jobs report on Friday and inflation data on November 10, which will shape expectations of a December rate hike.

CoinShares: “The Election Itself Was Never the Decisive Factor”

James Butterfill, Head of Research at CoinShares, dissects the political side. Bitcoin took the Democrats’ win “remarkably calmly” because markets had been positioning for it for weeks. The more interesting question is whether Trump now becomes a “lame duck” or an even less predictable actor: in foreign and trade policy and in governing by executive order, he retains considerable powers. “Fewer opportunities to pass legislation by no means mean less influence on markets.”

For crypto regulation, Butterfill expects “a slower legislative pace rather than a fundamental change of course.” The CLARITY Act, the market structure law for digital assets that Congress first passed in 2025, now faces considerably higher hurdles and will likely have to restart in the new Congress from January, on which both analysts agree. The Democratic majority also gives the party more influence over committee agendas, key appointments and investigations into crypto ventures with Trump connections, “which could produce some uncomfortable headlines.” However, CLARITY has lost weight compared with a year ago: the GENIUS stablecoin law is already in force, and the SEC and CFTC have pushed ahead with their own rules on tokenized securities and market structure. “Congress is no longer the only path to regulatory progress.”

The consequences will hit the market unevenly. Bitcoin is “relatively well insulated” from the legislative battle because its regulatory status is largely settled. Far more is at stake for US crypto exchanges, token issuers and companies that depend on new approvals. Stricter oversight could even strengthen established, compliant providers by raising costs for weaker competitors. Among listed crypto companies, Butterfill finds miners with secured power access and operating data centers particularly interesting, because the big AI cloud providers are competing for exactly that infrastructure.

Interest Rates Set the Tone

Away from politics, Bitcoin continues to track interest rates, liquidity and institutional flows, Butterfill says. The drop in oil prices after cautious progress in talks between the US and Iran eases inflationary pressure and gives the Fed a little more room. But the US economy remains “stubbornly robust”: 7.5 million job openings in September, 86,000 new jobs in the ADP report versus 67,000 expected, strong purchasing managers’ indices. For Friday’s jobs report, CoinShares considers the consensus of around 65,000 new jobs “rather pessimistic” and expects a figure closer to 100,000. That changes little for the Fed’s December meeting, where another 25 basis point hike is largely priced in. For Butterfill, this produces an unusual constellation: the election slows crypto legislation but removes political uncertainty, falling oil prices improve the inflation outlook, and the robust economy keeps the Fed from easing. “The election itself was never the decisive factor. Real yields, dollar liquidity and demand for exchange-traded products remain more important.” The legislative setback is therefore likely to be felt more in the rest of the crypto market than in Bitcoin itself.

Trending Topics analyzed how stock markets reacted to the election the day after the vote, with a selloff in AI and chip stocks and a dip in cryptocurrencies over concerns about stalled legislation. Two days later, the market looks like this:

Source: CoinGecko, as of Thursday afternoon, excluding stablecoins.

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