Author: Matt Hougan, Chief Investment Officer at Bitwise
Compiled by: DeepChain TechFlow
DeepInsight summary: The "blue wave" from the U.S. midterm elections returned Democratic control of both congressional chambers, initially raising market concerns about renewed tightening of crypto regulation. However, Bitwise Chief Investment Officer Matt Hougan noted that the election did not disrupt the balance of pro-crypto seats in Congress; the new House and Senate still feature a majority of lawmakers supportive of crypto.
In his view, the long-term direction of the industry is not determined by party turnover, but by the increasingly youthful generational makeup of Congress. The average age of newly elected senators is 14 years younger, and at least 94 Generation Z and Millennial lawmakers have entered the House of Representatives; despite short-term political fluctuations, mainstream sectors such as Bitcoin and stablecoins remain resilient.
The congress has turned "blue," but the "white hair" has also decreased.
Politics has always been a no-go zone, but today, let’s talk about politics—at least the part that directly relates to cryptocurrency.
Last week’s “blue wave” that swept through the U.S. midterm elections gave the Democratic Party control of both chambers of Congress. The Democrats flipped at least seven seats in the Senate (potentially up to nine) and regained a significant number of seats in the House of Representatives.
Elizabeth Warren, the Massachusetts Democratic senator known for leading the "anti-crypto army," is now likely to become the next chair of the powerful Senate Banking Committee, with the authority to launch investigations into any area she chooses.
You might think this is a disaster for cryptocurrency. And in the short term (over the next few weeks), I also believe the market will experience real, significant volatility due to concerns about policy shifts under Democratic control.
But looking at the bigger picture, I’m not concerned. In fact, I believe any pullback driven by election-related sentiment is likely to be a buying opportunity. This isn’t just wishful thinking on my part—I have concrete data to back it up.
Demographic structure is the equalizer of politics.
Let’s start with a surprising fact: Although last week’s election dramatically reshaped the power dynamics between the Democratic and Republican parties, it had little impact on the balance of power between the “pro-crypto” and “anti-crypto” factions within Congress.
According to statistics from the cryptocurrency lobbying group Stand With Crypto, 51 senators in the new Congress are “pro-crypto” (i.e., received an “A” or “B” rating on crypto policy issues). By comparison, the previous Congress had 52 such senators—hardly a “tsunami-level” shift.
Regarding the House of Representatives, although vote counts in many districts have not yet been finalized, Stand With Crypto has confirmed at least 241 pro-crypto lawmakers. Among the 425-member chamber, this firmly constitutes a majority.
You might be wondering: “What’s going on? I remember the previous Democratic administration was openly hostile toward cryptocurrency—didn’t the blue wave represent a clear negative?”
But the key point is that last week’s election was not just a political wave, but also a demographic wave. Statistics show that the average age of newly elected senators is a full 14 years younger than that of their departing counterparts, and the number of senators under 50 nearly doubled, rising from 8 to 15. In addition, the new House of Representatives will welcome at least 94 Gen Z or Millennial members, a significant increase from the previous Congress.
In other words, Congress has indeed turned "blue," but the "white hair" has also decreased.
People often underestimate the importance of generational population structure in the adoption of cryptocurrencies. As they age, they accumulate more wealth and gain greater influence, eventually assuming leadership roles in key institutions—individuals who, on average, are more comfortable with the technologies that accompanied their growth.
For this reason, according to a recent survey by Charles Schwab, millennials are more than four times as likely to hold cryptocurrency (33%) as baby boomers (8%).
Take newly elected Texas Democratic Senator James Talarico, who at just 37 years old will become the youngest senator in the United States after being sworn in next January.
Throughout Talarico’s career, Bitcoin has been a constant presence. Unsurprisingly, he received an A rating from Stand With Crypto; during his tenure in the Texas Legislature, he voted twice in favor of establishing a strategic Bitcoin reserve for Texas.
Of course, this doesn't mean that cryptocurrencies will sail smoothly in front of a Democratic-controlled Congress. I anticipate that large-scale, high-profile investigations into Trump-associated projects such as Trumpcoin and World Liberty Financial will follow, along with new regulatory risks for areas like prediction markets.
As I mentioned earlier, market conditions over the coming weeks and possibly months are unlikely to be easy. However, for the core sectors that truly represent the mainstream direction of cryptocurrency—namely Bitcoin, stablecoins, and asset tokenization—I believe the overall outlook remains solid. As the saying goes, demographics determine destiny.
