Ethereum traded near $2,240 on Oct. 31 as a sustained October slide and weakening institutional demand kept sellers in control, leaving the token exposed to a further decline toward the $2,000 level.

U.S. spot Ethereum ETFs recorded approximately $1.61 billion in withdrawals over the month, their worst monthly performance. The figure carries weight because spot ETFs are among the most direct channels through which institutional capital reaches ether, making sustained withdrawals a visible gauge of fading institutional appetite. The pullback coincided with falling decentralized finance (DeFi) valuations and renewed concerns about U.S. interest rates. Technical analysis has also flagged a possible bearish reversal: a reported head-and-shoulders formation points toward potential downside near $2,000, though the pattern still requires confirmation. Whether the formation confirms, and how ETF flows trend into November, stand out as the near-term data points for readers tracking the token's path.

Polymarket Odds Favor a Democratic Sweep

As the U.S. midterm elections approach, most traders and pollsters expect Democrats to flip both chambers of Congress. On prediction platform Polymarket, the odds of the party taking the Senate stand at 71%, while the probability of it winning the House of Representatives is 95%. Prediction markets like Polymarket reprice continuously as news breaks, and have become a widely followed real-time complement to traditional polling ahead of U.S. elections.

Such an outcome would bring immediate changes to the crypto industry, which has gone through major shifts during the first two years of the Trump administration.

CLARITY Act Prospects Collapse to 3%

One of the administration's biggest legislative successes was the GENIUS Act, which focused on the stablecoin industry. The Senate, however, failed to pass the CLARITY Act, commonly known as the market structure bill.

The legislation's central purpose was to transfer most crypto regulatory duties from the Securities and Exchange Commission (SEC) to the Commodity Futures Trading Commission (CFTC), an agency known for taking a more relaxed approach to regulation. Which regulator oversees which parts of the crypto market has been one of the longest-running sources of uncertainty for U.S. digital asset firms, which is why the bill's fate carries implications well beyond Congress. The bill stalled after Democrats and Republicans failed to agree on social ethical provisions designed to prevent President Donald Trump and other politicians from launching their own crypto tokens and engaging in corruption.

With Democrats positioned to retake either chamber, the odds that the CLARITY Act will become law have slumped to just 3%.

Crypto Companies Face Potential Investigations

If Democrats win the House and the Senate, they will chair key panels wielding investigation and subpoena powers. Among the probes to watch is one targeting Donald Trump's World Liberty Finance, the company behind the WLFI token and the USD1 stablecoin.

Democrats are expected to examine a $2 billion investment made by the United Arab Emirates (UAE) into Binance using the USD1 stablecoin. The arrangement has been earning World Liberty millions of dollars, as the company invests the reserves in government bonds. The investment is probably the reason President Donald Trump decided to pardon Changpeng Zhao, and it likely violated the emoluments clause of the U.S. Constitution. As a result, there is a risk that Trump will be impeached — odds of his impeachment have jumped on Kalshi and Polymarket.

Democrats are also likely to investigate the SEC over its actions on the industry, as well as Trump Media & Technology, a major Bitcoin holder. The company recently started a service giving hedge funds access to Trump's posts on Truth Social.

Geopolitical Risks in Focus

Another potential catalyst for the crypto market is the resumption of the U.S.-Iran war if Democrats win. In that scenario, Trump may decide to restart the conflict to distract from the electoral loss; a Republican victory, by contrast, would amount to a stamp of approval for his war. A renewed conflict would push oil prices higher, translating into elevated inflation — a shift that would affect crypto prices, particularly with interest-rate expectations already a live concern for risk assets this month.

This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments involve substantial volatility and potential losses. Readers should conduct independent research before investing.