This week, Bitcoin (BTC) surged in the wake of the U.S. midterm elections, only to tumble heading into the weekend. Democrats won majorities in both the House and the Senate, handing Republicans a heavy defeat. U.S. crude oil futures fell on expectations that the Trump administration would face mounting pressure to end the fighting with Iran. That eased inflation concerns and pushed U.S. interest rates lower, and buying on hopes of looser financial conditions lifted the crypto market.
At the same time, the Democratic victory also raised fears of tighter crypto regulation. Reports that Democrats had begun considering legislation to expand the powers of the U.S. Securities and Exchange Commission (SEC) revived memories of the tough regulatory stance under former Chair Gary Gensler. Scrutiny of President Donald Trump’s crypto-related businesses was also a concern. Then on-chain data showed that Trump Media & Technology Group had moved about 4,259 BTC, roughly 30% of its holdings, to the crypto exchange Crypto.com, fueling fears of a sale. The company has not confirmed that it sold the coins.
Adding to the pressure, U.S. tech stocks fell sharply, and in a separate case funds illicitly taken from a French bank were moved out through crypto exchanges. Together these tipped the market toward selling into the weekend. Lower oil prices and falling rates may provide a tailwind, but buying is hard to sustain when worries about tighter regulation and how assets are safeguarded are growing. It was a week in which the political outlook and the distrust left by a string of fund outflow incidents drove the market.
