Crypto's $170 Million Midterm Hangover

Fortune ran a headline on Wednesday that I had to read twice.

Crypto’s political groups spent more than $170 million on the midterms. And, in Fortune’s words, they “came up nearly dry.”

That’s an expensive hangover.

By Thursday, Bitcoin had joined in. It fell more than 5% in a day as tech stocks crashed. On Friday, a strong jobs report made a Fed rate hike seem likely in December.

An election, a stock crash and a jobs surprise. All in one week.

So this issue comes down to one question. What happens to crypto when the people writing the rules change sides?

Let’s walk through it.

😮 The Most Expensive Losing Streak in Washington

Crypto bought plenty of friends in Congress, but it didn’t buy the keys to the building.

On November 3, Democrats won control of both the House and the Senate. They flipped Senate seats in places few people expected, including Texas, Ohio, Iowa and Kansas.

Crypto’s political groups had bet heavily the other way. Ohio hurt the most.

Sherrod Brown is one of crypto’s loudest critics in Washington. Crypto groups spent more than $40 million backing his opponent, Senator Jon Husted, plus another $24 million attacking Brown directly, according to Fortune.

Brown won anyway.

Two crypto-friendly House Republicans, Bryan Steil of Wisconsin and Bill Huizenga of Michigan, lost their seats too.

It wasn’t a total wipeout. Stand With Crypto, the advocacy group started by Coinbase, says 27 of its 45 endorsed candidates won, with six races still being counted at the time.

So crypto still has friends. The problem is where they sit.

Think of a house party where you know half the room. Lovely. Except none of them own the house, and the new owner hates your music.

From January, Democrats run the committees, and committees decide which bills get a hearing. Senator Elizabeth Warren, one of crypto’s best-known critics, is in line to chair the Senate Banking Committee. That’s the committee that handles crypto bills.

Why does one chair matter more than 27 wins? Because the chair picks what gets talked about. A bill that never gets a hearing never gets a vote.

Why the Big Crypto Bill Is on Life Support

The big crypto rulebook is stuck, and the people who could unstick it have no reason to hurry.

The CLARITY Act is the bill meant to set the ground rules for crypto. It decides which regulator polices what: the SEC (the stock market cop) or the CFTC (the referee for things like oil, wheat and, under this bill, many crypto tokens).

It passed the House in 2025. Then on September 15, it failed a key Senate vote, 49 to 50.

A big sticking point was ethics. Democrats wanted limits on elected officials making money from crypto. That’s a pointed request, because the president’s family has a large stake in it.

World Liberty Financial is a crypto business tied to the Trump family. Its own disclosures say a Trump-linked company is entitled to 75% of WLFI token sale proceeds, after certain costs. Its dollar-linked coin, USD1, was used to settle a $2 billion investment in the exchange Binance by Abu Dhabi’s MGX. In October 2025, Trump pardoned Binance founder Changpeng Zhao. Binance denies any quid pro quo, and the White House disputes claims of improper dealings.

Now Democrats get the power to dig. On Thursday, Senator Richard Blumenthal, expected to lead the Senate’s top investigations panel, sent letters to World Liberty, Binance and Tether. He wants records by January 4. That’s the day after the new Congress starts.

So why would Democrats rush a Republican bill through before then? It’s like being offered your neighbor’s used car on Friday when you get the keys to the showroom on Monday. You wait.

The betting markets agree. On Kalshi, a regulated market where people trade on real-world events, traders gave a crypto market structure law about a 2.7% chance of passing before 2027, as of Sunday. Before 2028? About 21%.

House Democrats are reportedly sketching their own version instead. It would build on Representative Maxine Waters’ Crypto Investor and Consumer Bill of Rights, with a bigger role for the SEC and a smaller one for the CFTC.

The good news? Rules are still arriving through the side door. The GENIUS Act, the stablecoin law already on the books, now has a final rulebook from the Office of the Comptroller of the Currency (a bank regulator). It takes effect January 18, 2027. And in September, the SEC gave certain venues a five-year exemption to trade tokenized US stocks (digital copies of real shares that live on a blockchain).

So what does that mean for you? Don’t count on one giant law to rescue prices anytime soon. Expect smaller rules from the agencies, one at a time.

📉 Bitcoin Got Caught in Someone Else’s Fight

Bitcoin fell this week because of phone chips and data centers, not because of anything inside crypto.

What does a phone chip maker have to do with your Bitcoin? More than you’d think.

On Thursday, Qualcomm fell nearly 10% and Arm dropped 13% after weak forecasts. Investors were already nervous that a Democratic Congress could slow the data center building boom behind AI. In Texas, governor-elect Gina Hinojosa has promised a pause on new data center approvals.

The Nasdaq fell 5.5%, its worst day since April 2025. The S&P 500 lost 4.3%. CNN put the damage at about $2.5 trillion in stock market value.

Bitcoin fell more than 5% the same day. Over $1 billion of crypto bets were liquidated in 24 hours, and most of them were bets on prices going up.

Liquidated means forced closed. It happens to people who trade with borrowed money to make bigger bets.

Trading on borrowed money is like borrowing your neighbor’s ladder to reach the top shelf. Brilliant, until the ladder wobbles and the neighbor wants it back right now. When prices drop far enough, the exchange takes the ladder back. It sells your position for you, and all that selling pushes prices lower still.

As of Sunday, Bitcoin sits near $75,800, according to CoinGecko. That’s about 26% lower than this time last year.

Traders are watching one line: the 200-day moving average, which is about $73,200 right now. That’s the average daily price over the last 200 days, a rough guide to the longer trend. Bitcoin sits about 3.5% above it. Many traders treat a line like that as a floor. Floors can hold. They can also give way.

📅 The Fed Might Raise Rates, Not Cut Them

A strong jobs report means the next move on interest rates may be up, and that’s rarely good news for Bitcoin.

On Friday, the Bureau of Labor Statistics said US employers added 165,000 jobs in October. Forecasters had expected about 65,000. Unemployment dipped to 4.1%.

Good news for workers. Awkward news for crypto.

A strong job market gives the Federal Reserve room to raise interest rates to fight inflation. After the report, traders priced the odds of a quarter-point hike at the Fed’s December meeting at about 77%, according to CME FedWatch.

A rate hike is like the bank hanging a “Sale” sign over the safe savings aisle. Plenty of shoppers stop wandering into the riskier aisles. Why hold a coin that pays nothing when a dull savings account pays you more to wait?

Here are the dates worth sticking on your fridge door:

1. Tuesday, November 10: the October inflation report (CPI). Hot inflation makes a December hike more likely.
2. December 8–9: the Fed meeting and its rate decision.
3. January 3: the new Congress starts, and Democrats take the committee chairs.
4. January 4: Senator Blumenthal’s deadline for records from World Liberty, Binance and Tether.
5. January 18, 2027: the GENIUS Act stablecoin rules take effect.

The so-what: Tuesday is the big one. If inflation comes in hot, expect another bumpy week.

So Where Does That Leave Us?

Crypto had a rough week, and most of it was other people’s doing. Voters changed Congress. Chip makers missed their forecasts. Employers hired more people than anyone expected. Bitcoin got shoved around in the crowd.

The easy story is over. The pitch used to be “friendly rules are coming.” Now it’s “friendly rules are stuck in traffic.”

Crypto has been sent to the back of the queue. Any Brit will tell you a queue moves slowly, but it does move, as long as nobody pushes in.

My prediction: no big crypto market structure bill becomes law before 2027. Progress keeps coming from the agencies instead, starting with the stablecoin rules in January.