Bitcoin and Ethereum recovered on Wednesday after Democrats won control of both chambers of Congress in the U.S. midterm elections, even though the results are likely to make the crypto industry's push for friendlier federal rules more difficult.

Bitcoin, which briefly touched a six-week low, traded at $78,354 early Wednesday before a bounce carried it back above $80,000, putting the asset above its average price of the last 50 days — a move regarded as a solid bullish sign after weeks of bearish correction. Ethereum rose to $2,323 and at one point spiked 7% to $2,434.

U.S. equities rallied as well. Stocks broadly jumped around 1.6%, with the Dow Jones Industrial Average leading the way with a 2.5% rally. The overnight selloff also reversed as U.S. stock futures bounced back, making it hard to pin the crypto recovery on politics alone.

Analysts who spoke to Decrypt said the market recovery appears, in technical terms, to be more of a natural bounce in line with expectations rather than a trend reversal or a FOMO-driven spike. They added that the Democratic sweep had largely been priced into crypto markets before election night, meaning Bitcoin's rebound says less about investors welcoming the election result than about how much bad news they were already expecting.

$300 Million Spent Across Two Election Cycles

The industry has spent more than $300 million supporting crypto-friendly candidates from both parties across the 2024 and 2026 election cycles, even as hacks and investment outflows weighed on the market. About $176 million went toward more than 100 races this year alone.

That spending was aimed partly at getting legislation through Congress that would give digital asset businesses clearer rules. The Clarity Act, a major piece of that effort, would define how federal regulators oversee different types of crypto assets and trading activity.

The bill was in trouble before Tuesday's election. Senators voted 49-50 against advancing it in September, falling short of the 60 votes needed to move past a procedural hurdle. The 60-vote threshold is a standing Senate requirement for advancing most legislation, which means bills of this scale typically need support from both parties to progress. That was not a final vote on the legislation, but it stopped the measure from reaching a full debate.

Negotiations had already run into disputes over restrictions on government officials' crypto business interests and the treatment of rewards paid on stablecoins, tokens designed to hold a fixed value. President Donald Trump's personal and family crypto ventures became a particular point of conflict for Democratic lawmakers.

Democratic control of Congress makes a quick return to the same legislative deal less likely, but it does not automatically undo what the industry secured under Trump. Under standard congressional practice, the majority party in each chamber controls committee chairmanships and the legislative calendar, giving Democrats significant say over whether any revived bill reaches the floor. His administration has eased enforcement, established a strategic Bitcoin reserve and overseen the passage of a federal stablecoin law.

The distinction matters more for exchanges, token issuers and other firms seeking clear legal permissions than for Bitcoin's day-to-day price. Analysts told Decrypt that liquidity, interest rates and investment flows still exert a stronger influence on the cryptocurrency itself.

Broader Market Headwinds

The election is not crypto's only problem. The broader crypto market has shed roughly $300 billion over the past month, bringing its total value to about $2.67 trillion. Rising borrowing costs and worries about returns on artificial intelligence investments have pushed traders toward less risky assets like bonds and gold.

Major Bitcoin exchange-traded funds, which offer exposure to the asset through traditional brokerage accounts, recorded $215 million in net withdrawals in October. That brought their year-to-date net outflows to $1.84 billion. Flows in these funds are closely watched as an indicator of demand from traditional finance investors.

The new Congress takes office in January 2027. Unless lawmakers revive the Clarity Act before the current session ends, the industry will need to start a new legislative effort with Democrats controlling both chambers.