The popular pattern says Bitcoin falls before US midterm elections and rallies after them. In the numbers, that pattern depends on the start date. For the 2014 vote, one analysis shows a crash ofThe popular pattern says Bitcoin falls before US midterm elections and rallies after them. In the numbers, that pattern depends on the start date. For the 2014 vote, one analysis shows a crash of

Learn/Trading Guide/US Stocks/Midterm Elections and Bitcoin: Why the "Fall First, Then Rise" Pattern Depends on Your Start Date

Midterm Elections and Bitcoin: Why the "Fall First, Then Rise" Pattern Depends on Your Start Date

Author: Marcus O'Brien

Beginner

Nov 5, 2026Marcus O'Brien

9 min

The popular pattern says Bitcoin falls before US midterm elections and rallies after them. In the numbers, that pattern depends on the start date. For the 2014 vote, one analysis shows a crash of about 58% in the following month, while another shows a 12.8% gain. This guide shows what survives once the window is fixed, and why AI stocks and crypto regulation make 2026 different.

Update, November 5: this guide was first published on Election Day, November 3, before results were known. Democrats won control of both the House and the Senate. On November 4, the first session after the vote, the Dow rose 3.0% to 53,356, the S&P 500 gained 1.6% and the Nasdaq 1.4%, while Brent crude fell 8.7%. Bitcoin dipped to about $75,600 as results arrived and rebounded to a high near $81,100 on November 4. The sections below have been updated with the results.

Key Takeaways

Stocks: the S&P 500 rose in the 12 months after 32 of 38 midterms since 1874, averaging about 14%, and has been higher 12 months after all 19 midterms since 1950.
Bitcoin: higher 12 months after each of the last three midterms (+24.5%, +44.9% and +92.3%), but it fell 45.5% in the month right after the 2018 vote.
The vote is rarely the driver: economic fundamentals, not which party controls Congress, primarily drive equity returns.
2026 is different: Democrats won both chambers, the Dow rose 3.0% in the first session, and Bitcoin rebounded from about $75,600 on election night to a high near $81,100. Bitcoin's 2026 low came in July, months before the vote, while AI infrastructure spending and a stalled crypto bill add policy risk that earlier midterms did not carry.

What the S&P 500 Did Around Past Midterms

Stocks have usually been choppy before the vote. In the 12 months before midterms, the S&P 500 averaged 2.9%, against a long-run average of 8.9%, and the average peak-to-trough drawdown in midterm years is about 16%.

The S&P 500 rose in the 12 months after 32 of 38 midterms since 1874 and has been higher after all 19 since 1950, but the recovery is gradual rather than instant. The month after a midterm is muted, at an average of 0.5% and positive only 55% of the time. Gains build later: about 6% on average after three months, 10% after six months and 14% after twelve. The first session after the vote has been mixed: up 2.1% in 2018 and down 2.1% in 2022. In 2026 the S&P 500 rose 1.6%, its best day in three months, and the Dow gained 3.0%. AP tied part of the rally to Brent crude falling 8.7% to $94.62, which traders linked to the chance that a Democratic Congress would push the administration to pull back from the war with Iran.

The party that wins matters less than many expect. Divided government under a Republican president followed 14 midterms, and the market was higher 12 months later 93% of the time. Democrats won both chambers in 2026, so that is the setup. The exceptions to the broad pattern cluster in crisis eras, such as the 1930s, and reflect the economy of the time rather than election results.

Options markets had treated the 2026 vote as routine. Man Group estimated the implied S&P 500 move for November 4 at about 20% larger than usual but roughly half the size priced around a presidential election. The index rose 1.6% on the day.

What Bitcoin Did Around Past Midterms

Bitcoin has only three liquid midterm cycles: 2014, 2018 and 2022. CryptoQuant data summarized by DigitalToday shows the pattern:

2014: +24.5% over the following 12 months.
2018: a 45.5% drop in the month after the vote, then +44.9% over 12 months.
2022: +92.3% over 12 months, with the FTX collapse landing in the same week as the midterms.

Three data points are not a rule, and the "falls first, then rises" story depends heavily on how it is measured. For the 2014 vote alone, one analysis found a crash of about 58% in the month after the election, while another, measuring 30 days from the close before Election Day, shows a 12.8% gain. Peak-to-trough and close-to-close windows tell different stories about the same event.

There is also a confounder. Bitcoin bottomed in January 2015, December 2018 and November 2022, which was 71, 38 and 13 days after Election Day. Past midterms fell near the end of bear markets, so the election is hard to separate from the Bitcoin halving cycle. In 2026, the year's low of $57,850 came on July 1, 125 days before the vote, so this cycle already breaks the template.

Where Bitcoin stands now: it fell about 7% in October, dipped to about $75,600 as results arrived, then rebounded to a high near $81,100 on November 4. Bitfinex analysts attributed much of the bounce to short covering rather than new spot buying and warned that support below $77,000 is thin. Macro variables moved alongside the vote: the 10-year Treasury yield fell to 4.88% from 4.95% the day before, and US spot Bitcoin ETFs recorded about $1.16 billion of net outflows over the three sessions to November 3. Whether spot Bitcoin ETF flows turn positive is the next signal to watch.

What About Ethereum?

Ethereum has traded through only two midterm cycles in its current form, 2018 and 2022. Using Binance spot daily closes (UTC), measured from the day before Election Day, the record is mixed:

2018: ETH fell 51.2% over the following month, from $210.66 to $102.71, and was still 10.4% below its starting level a year later. Bitcoin on the same basis fell 41.7% in a month and was up 43.9% after a year.
2022: ETH fell 21.5% over the following month, during the FTX collapse, and was up 20.2% after a year. Bitcoin on the same basis fell 18.2% in a month and was up 71.9% after a year.

Two cycles are too few to call a pattern. What the data does show is that ETH fell harder than Bitcoin in the month after both votes and recovered less over the following year. Start dates also matter: the 2022 one-year Bitcoin gain is 71.9% on this basis and 92.3% in the CryptoQuant figures above, so compare statistics only when they use the same start date and data source. For background on the network behind these numbers, see MEXC's guide to how Ethereum works.

Why 2026 Is Different: AI and Crypto Policy

The AI Trade

AI infrastructure spending is expected to top $1 trillion next year, which is why data center politics now matters to equity investors. Wall Street had expected Democrats to win at least one chamber, and stricter AI oversight and more hearings are the main risk. Evercore ISI flagged that AI-focused hearings could create market risk, while one policy strategist noted that the midterms matter more for laying groundwork for later legislation than for immediate federal limits on data centers.

The counterweight is the presidential veto. Analysts doubt that national legislation would stall data center construction, and Trump would likely block bills unfavorable to the industry. Electricity costs have also made data centers a campaign issue, so state-level rules may move faster than Congress. On November 4, AI-related stocks weakened even as the broad market rallied, with Nvidia down 3.1%.

Crypto Regulation

The Senate failed to advance the Digital Asset Market Clarity Act on September 15, with 49 votes against the 60 needed, and Coinbase and Circle shares fell. Democratic control of Congress could now bring demands for stricter consumer safeguards, limits on yield-bearing stablecoins and more scrutiny of Trump's crypto businesses. Control of Congress does not by itself change crypto law, since any bill must still pass both chambers and survive a presidential veto.

Congress has already passed one major crypto law, the GENIUS Act for payment stablecoins, so the stalled Clarity Act is the broader market-structure piece. The industry has spent heavily to shape the outcome: Public Citizen estimated crypto-related companies had spent about $189 million on the 2026 cycle through June 30. Political money has so far outrun legislative results.

Reading the Odds: What Prediction Markets Price In

Before the vote, prediction markets priced Democrats at about 93%–95% to win the House (Kalshi 93%, Polymarket 95%) and roughly three in four to win the Senate, up from 68% on October 27, with a Republican sweep of both chambers near 6%. Democrats won both chambers, which was the most likely outcome in the pricing. The Senate still carried roughly a one-in-four chance of going the other way, so the result is consistent with the odds rather than proof that markets predicted it.

When an outcome is largely priced in, what moves markets is the margin. Democrats won decisively: the AP tally had them winning 228 House seats with 34 more leading as of November 4, and the S&P 500 had its best day in three months. To understand how event contracts work, see MEXC's guide to how prediction markets work.

Three Scenarios and What Happened

These were the three scenarios framed before the vote.The first one happened.

Democratic sweep (House and Senate): the most scrutiny for AI infrastructure and crypto legislation, with the presidential veto still limiting near-term federal action. Outcome: this is what happened. Nvidia fell 3.1% on November 4 while the broad market rallied, and Bitcoin rebounded after an election-night dip.
Democratic House, Republican Senate: more House oversight, with the Senate still in Republican hands. This is the gridlock setup that has historically been followed by positive 12-month stock returns.
Republican hold: a surprise against current pricing. The reaction would depend on how far positions had been built for the opposite result.

What Matters After the Vote

The October jobs report on November 6 at 8:30 a.m. Eastern.
The Fed's next move, after it held rates at 3.75%–4% on October 28 with two policymakers preferring a hike.
Whether spot Bitcoin ETF outflows reverse.
Oil and the Iran talks, which drove part of the November 4 rally.
Next steps for the Clarity Act and state-level data center rules.

For context on how markets treated the previous US election, see MEXC Learn's coverage of the 2024 presidential result.

FAQ

Does the stock market go up after midterm elections?

Usually, over 12 months. The S&P 500 has risen after 32 of 38 midterms since 1874, but the first month is muted and the sample includes crisis-era exceptions. In 2026 the S&P 500 rose 1.6% on the first session after the vote.

Does Bitcoin go up after midterm elections?

Bitcoin was higher 12 months after each of the last three midterms, but fell 45.5% in the month after the 2018 vote. Three cycles are too few to call it a rule. In 2026 it dipped to about $75,600 on election night and rebounded to near $81,100 the next day.

Does it matter which party wins?

For broad stock returns, history says little. For specific sectors, such as AI infrastructure and crypto, control of Congress affects oversight and legislation. On November 4, 2026, health care and retail stocks rallied while defense stocks fell, according to AP; Lockheed Martin lost 6.9%.

How do midterms affect AI stocks?

Mainly through scrutiny of data center expansion and AI regulation. A presidential veto limits federal risk in the near term. On November 4, Nvidia fell 3.1% while the Dow rose 3.0%.

How do midterms affect crypto regulation?

The Clarity Act stalled in the Senate in September. Democrats now control both chambers, which could shift the debate toward consumer protections and stablecoin yield limits, but any bill still has to pass both chambers and survive a presidential veto.