Bitcoin recovers $80,000 despite Trump midterm loss as Clarity Act fate hangs in balance

With Democrats reclaiming control of both chambers of Congress in the US midterm elections, analysts say the digital asset-friendly policies pursued by the Donald Trump administration could face significant headwinds. Even so, bitcoin has rebounded above the $80,000 mark despite the growing regulatory uncertainty.

Bitcoin was trading at $80,428 as of 8:58 a.m. Thursday, up 3.77% from 24 hours earlier, according to CoinMarketCap. The cryptocurrency had slid to around $75,000 during trading immediately after vote counting began, but recovered above $80,000 overnight and has held its gains since. Ether also rose 6.36% over the same period to $2,423.

Major altcoins broadly advanced as well. Zcash (ZEC) gained 5.24% from 24 hours earlier, while Solana and XRP rose 2.87% and 2.02%, respectively.

Market observers attributed the rebound partly to the clearing of election-related uncertainty. A weakening dollar and falling government bond yields also helped revive appetite for risk assets, analysts said.

Shares of digital asset-related companies also rose across the board. Strategy, which holds a large bitcoin reserve, climbed 5.09%, while Coinbase gained 4.16%, Robinhood 2.02% and Circle Internet Group 1.20%.

The industry, however, views the election outcome as a potential setback for the US digital asset sector. Trump had pledged during the 2024 presidential election to make the United States the "crypto capital of the world" and has since aggressively pursued pro-digital asset policies. After returning to office in January last year, his administration enacted the GENIUS Act, a federal framework for stablecoin regulation.

Markets are now closely watching for possible delays to the follow-up Clarity Act. Kim Jong-seung, CEO of Xcrypton, said passage of the bill would be difficult unless the Democratic Party's outstanding objections are addressed. "The key question is how willing the Republican Party and the Trump administration are to accept the amendments Democrats have demanded," Kim said.

Democrats have taken issue with Trump and his family's involvement in digital asset ventures through the TRUMP meme coin and World Liberty Financial, calling for stronger conflict-of-interest safeguards for public officials and enhanced investor protections.

In September, Republican Sen. Cynthia Lummis released a final amended version of the bill incorporating 126 Democratic demands, but Democrats countered that the conflict-of-interest provisions lacked teeth and submitted a counterproposal. The two sides ultimately failed to bridge their differences, and the bill fell short of the 60 votes needed to advance in a Senate procedural vote.

Blocking illicit funds from entering digital asset markets and strengthening investor protections are also cited as major sticking points. The possibility that prediction markets could circumvent existing gambling regulations has also drawn controversy. Democratic Sen. Martin Heinrich opposed the Clarity Act in September, arguing that prediction markets could bypass gambling regulations and infringe on the authority of Native American tribes and state governments over gambling.

While legislation has stalled in Congress, the SEC and the Commodity Futures Trading Commission have been developing their own regulatory frameworks for tokenized securities trading and digital asset derivatives under existing law. Kim said he does not expect the two agencies to scrap all the rules they have been working on from scratch, but added that Democrats could raise objections if regulators craft rules that unduly favor specific interest groups without a clear legal basis.

Tiger Research, in a report released Wednesday, said Democratic control of both chambers had shifted legislative leadership over digital assets from Republicans to Democrats. The firm predicted that prominent regulatory hawks — including Sen. Elizabeth Warren, Sen.-elect Sherrod Brown and Rep. Maxine Waters — would expand their influence on key congressional committees.

Meanwhile, digital assets linked to the Trump family have tumbled since the midterm results came in. According to CoinMarketCap, Official Trump (TRUMP) plunged 20.48% from 24 hours earlier, while Official Melania Meme (MELANIA) and World Liberty Financial (WLFI) fell 13.18% and 6.68%, respectively.