Nobody wants to own digital assets right now. They probably should.

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Think back to how you felt in November 2022.

If you were involved in digital assets at the time, there’s only one response…

Awful.

On November 2 of that year, CoinDesk publishes the balance sheet of Alameda Research, the trading firm affiliated with crypto exchange FTX. The report shows some… questionable… accounting and a heavy reliance on FTX’s own token, FTT.

The revelations shock the market. Only a few months earlier, FTX had seemed like the industry’s white knight when it looked to bail out several firms that had blown up in spectacular fashion. Now, its foundation appears to be built on sand.

On November 6, CZ, founder of Binance, says his firm will dump its FTT. Investors who hold assets on FTX panic. A run begins.

On November 7, FTX founder Sam Bankman-Fried (SBF) tweets that his company is “fine.” He later deletes it.

On November 8, Election Day, FTX halts all withdrawals. Bitcoin falls below $19,000. Fearing a larger contagion, Binance announces its intention to rescue the beleaguered competitor.

On November 9, Binance walks away…

FTX and its affiliates file for Chapter 11 two days later.

Tear it down. Pack it up. Show’s over.

Nine days…

That’s how long it took FTX to go from white knight to villain.

Bitcoin cratered with it, falling to around $15,500 by November 21 – a 78% drop from its all-time high a year earlier. Those were tough times.

Guess what happened next.

You can probably see where I’m going with this…

About Last Night…

Democrats flipped the House and the Senate. As of this morning, they hold at least 54 Senate seats, with Alaska and Mississippi still counting, and they picked up at least 18 House seats.

The chances of advancing pro-crypto legislation over the next two years just took a major hit. That’s the headline.

There’s getting beat, and then there’s a whoopin’. Republicans, and the current administration, just had themselves a whoopin’.

And it’s not hard to see why…

Six in 10 voters say the war in Iran was the wrong decision. Nine in 10 told exit pollsters that the cost of living was a major factor in their vote. Half said Democrats would do a better job on healthcare.

Trump’s approval rating is the lowest for any president at a midterm on record. And last night’s results bear that out.

What you likely haven’t heard or read is what it means for digital assets and for crypto prices.

That’s what I’m here for, so let’s get to it.

The Reality

Several pro-crypto Democrats won last night.

James Talarico won Texas. In May 2025, as a state representative, he voted for Senate Bill 21, the bill that created the Texas Strategic Bitcoin Reserve. He became the first Democrat to win a U.S. Senate seat in Texas since 1988.

Chris Pappas won New Hampshire. As a House member, he voted yes on both the CLARITY Act and the GENIUS Act, one of 78 Democrats who crossed over on CLARITY in July 2025. He even wanted to see CLARITY move forward after the Senate failed to invoke cloture.

Troy Jackson won Maine. He campaigned on ending the debanking of lawful crypto businesses and protecting the right to self-custody.

Adam Hamilton won Kansas, the first Democrat to do so since 1932. He has no record on crypto but is expected to support it.

In the House, Ritchie Torres held his Bronx seat. Torres is one of the most vocal crypto advocates in the Democratic caucus.

The hard part is that none of those wins will do much to advance sound policy for digital assets over the next two years.

That’s because Sherrod Brown won Ohio.

Brown chaired the Senate Banking Committee from 2021 through 2024, the years when crypto companies were losing bank accounts and the SEC was suing exchanges instead of writing rules. He was Gary Gensler’s most reliable defender in the Senate. And in September 2023, he told regulators to use their existing powers against the industry rather than wait for Congress.

That’s why the crypto super PACs spent more than $40 million to remove him in 2024 and about $55 million trying to keep him out this year. It wasn’t enough.

What happens now is far from certain. But he is the likely next chair of the Senate Agriculture Committee. That committee oversees the Commodity Futures Trading Commission (CFTC), and therefore Bitcoin and every other digital commodity. It is one of the two Senate committees that decide what digital asset legislation looks like.

The other is Senate Banking, where Elizabeth Warren will likely take the gavel. We’ve spilled plenty of ink on what Liz thinks of the industry, so we won’t repeat it here. Suffice it to say she’s not a fan.

That puts major critics in charge of the two most important Senate committees for crypto.

The expected direction in 2027 and 2028 is guardrails.

Expect inquiries into the Trump family’s crypto holdings, into the 21 national trust charters the Office of the Comptroller of the Currency handed out, and into the SEC and CFTC for moving as quickly as they did this year. Warren will have subpoena power, and boy, does she know how to use it.

Oh, and on top of all that, the industry is still reeling from the largest hack in its history. The general mood today is somewhere between “bad” and “grim.”

You probably know all that.

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The Bottom Is Today

We’ve written before about how Bitcoin’s cycles dictate price action.

And when those cycles produce highs or lows, we tend to look to the news for a reason.

If the government is printing money, Bitcoin is an inflation hedge. If the government is clamping down on the financial system, crypto is capital routing around suppressive policy. If a market structure bill passes, that’s the catalyst. If it fails, that’s the catalyst too.

This time will be no different.

Whatever happens in the coming months will get the credit for rising prices.

You read that correctly… Rising.

The actual reason is the halving. It’s why Bitcoin was coincidentally at its lows during the last midterm elections four years ago.

We laid it out in “Bitcoin Will Hit $251,000.”

Bitcoin’s bear-market low has landed 513 to 542 days before the next halving in each of the last three cycles. With the next halving estimated for April 2028, that window points to the first or second week of November 2026.

And when I pull up the Lilly Law Model – the one I introduced in that same essay, which combines halving cycles, Power Law, and the Fed’s balance sheet – it puts a date on the bottom…

It’s today. November 4.

I’m not kidding.

The Lilly Law Model says that from this point forward, prices should start climbing.

It won’t happen all at once. It will be a gradual, quiet grind higher until one day it feels like a dam broke and we’re off to the races.

Yes, the election outcome wasn’t favorable for crypto legislation over the next couple of years. There was a real opportunity for the United States to be the go-to destination for digital asset investment and startups. That future is less likely now.

But crypto is global.

Prices will rise, and investment in the industry will rise with them.

The question that matters now is which part of the industry is likely to benefit most…

The Pirates

Artificial intelligence is about to get the regulatory moat it has been asking for.

Democrats in power tend to want more oversight, and AI was already on the ballot. A bipartisan House bill from Lori Trahan and Jay Obernolte would impose disclosure requirements on the largest model developers.

To the left of it, Bernie Sanders, Alexandria Ocasio-Cortez, and Greg Casar are backing a bill to ban the development of artificial superintelligence outright. That won’t happen, but you see where the conversation is.

The open-weight debate, where the biggest labs argue closed models are safer and the open-source camp argues the opposite, is now a live question for a Democratic Congress.

The issue now has more oxygen in Congress…

The day an open-weight model gets restricted in the United States might be closer than people think.

Which is why I expect AI to lean into permissionless and decentralized values in the year ahead.

We’ve been tracking this in Chain of Thought for some time, most recently in The Machine-Native Economy.

The response to any serious regulatory push will be decentralized inference, smart contracts that hold open model weights onchain where no single jurisdiction can ban them, and privacy-preserving tooling that lets models run on data nobody has to hand over.

It’s the same song and dance we saw with finance during the Gensler era. Only this time, instead of financial tools, it’ll be AI tooling.

Yes, other themes will likely surface in the coming weeks, and we’ll cover them as they arise.

For now, let Bitcoin do what it does best.

With the collapse of FTX four years ago, the bottom fell out of crypto. Nobody wanted to own digital assets. They probably should have.

With newly hostile committee chairs and the largest hack in the industry’s history, the bottom once again feels like it’s fallen out. Nobody wants to own digital assets.

They probably should.

Because we’re going higher.

Your Pulse on Crypto,

Ben Lilly
Editor, Chain of Thought

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