Bitcoin Nears a Bottom Before U.S. Midterms: What History and On-Chain Data Suggest

The connection between U.S. economic activity and the broader cryptocurrency market has tightened in recent months. Domestic factors such as interest rates and inflation, alongside U.S.-linked crypto assets, have become increasingly influential drivers of market behavior. This tightening reflects Bitcoin's evolution from a largely uncorrelated digital asset into one that trades in step with broader risk sentiment, meaning that macroeconomic policy shifts in Washington now move crypto markets almost as much as they move equities.

Among the most notable correlations currently in focus is the relationship between Bitcoin [BTC] and the upcoming U.S. midterm elections. Historically, these elections have functioned as a useful proxy for pinpointing market bottoms, a pattern observed in previous cycles. So far, the response from U.S. investors has remained measured.

Bitcoin Could Stall or Decline Before the Vote

Historical analysis using U.S. midterm elections as a correlation baseline indicates that Bitcoin typically weakens in the year preceding the vote, gradually forming a bottom.

That trough generally materializes in the days just before or shortly after the midterm election. Following the bottom, the asset has tended to embark on a year-long rally, at least according to those historical references.

Midterm elections occur at the midpoint of a presidential term, when voters select members of Congress and other officials. The results frequently determine whether the sitting president will face a more cooperative or adversarial legislature for the remaining two years, and they often reflect the prevailing economic climate. Because midterm outcomes can reshape fiscal policy, spending priorities, and regulatory momentum, markets across asset classes — not just crypto — have historically viewed them as inflection points that resolve political uncertainty.

The upcoming election is scheduled for November 3. If the historical fractal holds, there is a meaningful possibility that Bitcoin could see a stronger upward trajectory afterward.

The crypto market has not yet flourished under President Trump's administration, constrained by several headwinds — most notably oil-driven inflation concerns and escalating tariff disputes, which have tightened financial conditions across risk assets.

On-Chain Profit and Loss Signals Point to an Approaching Bottom

On the on-chain front, separate indicators have suggested that Bitcoin may be forming a bottom in the near to short term.

This analysis relies on two metrics: realized profit, which measures the aggregate profit investors have locked in on Bitcoin, and realized loss, which tracks the opposite. Together, these data points have historically signaled when a bottom is likely forming. These indicators are part of a broader family of on-chain tools that track the cost basis of coins that move on any given day, offering a real-time view of whether holders are exiting at gains or at a loss — a pattern closely watched by quantitative analysts and traders.

When realized profit on Bitcoin drops below realized loss, it has traditionally marked the inflection point at which the market begins laying the groundwork for an uptrend.

At the time of writing, the two lines on the chart are on the verge of crossing again — a development that could potentially catalyze a strengthening bullish run across the broader market.

Over the past four weeks, Bitcoin has traded within a narrow band, fluctuating between $62,000 and $65,000. Extended periods of compressed volatility in Bitcoin have often been followed by sharp directional moves, a pattern traders monitor closely when positioning ahead of a breakout or breakdown.

U.S. Investor Sentiment Remains Subdued

Sentiment among U.S. investors has been lackluster. Since the beginning of July, this group has directed minimal capital toward Bitcoin purchases.

According to data from SoSoValue, the netflow from U.S. investors this month stands at approximately $204.67 million. While this figure indicates that some interest persists, it also signals that these investors are far from fully bullish on the asset.

If July closes at this level, it would represent the lowest monthly bullish netflow ever recorded in the market. A reading this subdued suggests that domestic buyers are either waiting for stronger confirmation of a trend reversal or remain cautious amid the broader macro uncertainty, a stance that historical cycle analysis would view as consistent with late-stage bottom formation.

Summary

Historical midterm-cycle patterns suggest Bitcoin tends to bottom around the time of the vote before entering a year-long rally. If the pattern repeats heading into November 3, a similar setup could emerge. Meanwhile, on-chain profit and loss indicators hint that a bottom may be forming — though subdued U.S. buying activity throughout July leaves the signal far from confirmed.