Crypto investors have turned bearish in recent days as expectations build that Republicans could lose control of Congress in the U.S. midterm elections, according to crypto intelligence firm Santiment. In a post on X, the firm noted that the crowd was bullish on the midterm elections just two weeks ago.

Santiment said discussions about the U.S. midterms have increased significantly as Election Day approaches, but concerns about a potential shift in political power have risen alongside them. The mood shift comes with Bitcoin struggling around $76,500 amid the broader market slowdown.

Traders Favor Republican Control Even as Odds Point to Democratic Gains

The bearish sentiment signals a broad belief among crypto investors that Republican control of Congress is better for the industry, even as election odds point to a possible Democratic takeover. That view is unsurprising given the series of pro-crypto efforts by the Trump administration since 2025. As Santiment analysts observed, crypto traders now see Republicans as the more crypto-friendly party and are concerned about what could change if Democrats take control of Congress.

Republicans currently hold both the Senate and the House, though by narrow margins. Midterm elections put every House seat and roughly one-third of Senate seats on the ballot, leaving both chambers in play. However, most polls predict that Democrats will take the House in the midterms, while the Senate remains up for grabs. Prediction market odds support that outlook: Polymarket gives Democrats a 76% chance of taking over the Senate and a 94% chance of winning the House, and Kalshi shows similar odds.

Losing control of Congress could hurt any attempt to pass pro-crypto legislation in the second half of the Trump presidency. It could also mean Democrats chair the major committees, including those that oversee the crypto industry, giving the party significant influence over how crypto legislation advances. Industry stakeholders were already concerned about that eventuality, with crypto Super PAC Fairshake raising around $200 million to support pro-crypto candidates in this election.

The stakes were underscored by the Clarity Act, which failed to pass the Senate in September. In the lead-up to that vote, supporters of the bill warned that its failure could mark the end of the legislation.

Bitcoin Struggles as Market Slowdown Continues

The bearish sentiment among crypto traders comes at a time when Bitcoin and the broader crypto market are struggling amid the ongoing slowdown. With the $6.3 billion Binance exploit having already pushed BTC below $80,000, traders' sentiment suggests the asset could remain in that range for longer.

Bitcoin is currently trading around $76,500 after briefly rising close to $78,000 on Tuesday. The flagship asset is now down 5% over the past week amid weak demand and sustained liquidations.

The strain has spread to the rest of the market, with the Crypto Fear & Greed Index — a sentiment gauge that runs from 0 (Extreme Fear) to 100 (Extreme Greed) — now at 33/100, deep inside Fear territory. That is the lowest reading since August, underscoring the depth of the current slowdown.

Santiment experts believe the current bearishness could become a catalyst for a Bitcoin recovery. Historically, the asset has performed contrary to crowd sentiment, turning extreme bearishness into a counter-signal. The analysts said Bitcoin needs to maintain its current price level for that counter-signal to hold through.

"If BTC holds roughly $76.5K to $77K while election fear stays elevated, the odds of a relief rally improve. A reclaim of $79K would strengthen that signal," they wrote.

However, they warned that a further decline could reinforce current sentiment and expose Bitcoin to more price volatility. With Election Day at hand, the midterm results and Bitcoin's ability to hold its current range now stand as the twin markers traders are watching.

Source: The Market Periodical