After four midterm elections in history, how did BTC actually perform?
- Core Viewpoint: The policy uncertainty brought by U.S. midterm elections will transmit to BTC price action, but historical data shows that "sell-off after every election" does not hold. The short-term violent shakeout is essentially smart money using macro noise to complete a redistribution of positions.
- Key Elements:
- BTC has been widely absorbed by traditional finance and exhibits the characteristics of a high-beta risk asset, with significantly enhanced correlation to U.S. stocks, dollar liquidity, and global risk appetite.
- The short-term effects of the past four midterm elections (2010, 2014, 2018, 2022) diverged: one month after the 2018 election, BTC plunged 45.5%, while in the same period in 2010 it rose 31.6%.
- One year after the elections, BTC almost always recorded positive returns, with the lowest at +23.0% in 2014 and the highest at +1580.0% in 2010; after the one-month decline following the 2018 election, BTC still rose 45.2% over the following year.
- Risk-averse sentiment around elections can easily trigger stampedes among highly leveraged longs and retail investors, while large capital uses liquidity traps to absorb stop-loss selling at low levels and complete long-cycle bottom-position accumulation.
- On-chain data shows that whales have accelerated BTC accumulation over the past month, reaching the highest level since February this year.
- Risk warning: The historical sample consists of only four instances, and the current dollar interest rate environment and ETF capital structure are significantly different from past cycles.
Original author: Gemini, TechFlow
On November 3, the U.S. midterm elections are approaching. Whenever this time comes around, the market always stirs up discussion about the "risk asset curse."
From a macro logic standpoint, midterm elections do indeed affect risk assets, and the core reason lies in "policy uncertainty." Who controls Congress directly relates to core issues such as subsequent fiscal spending, tax policy, regulatory intensity, and the debt ceiling.
These expectations get priced in by the market ahead of the election; when uncertainty rises, capital instinctively becomes cautious, and risk appetite declines accordingly.
As for today's BTC, it has been widely co-opted by traditional financial channels and increasingly resembles a high-beta risk asset, with its correlation to U.S. equities, dollar liquidity, and global risk appetite markedly strengthened.
Therefore, the shifts in policy expectations brought about by the midterm elections will most likely transmit to BTC's price action; however, note that this should not be understood as BTC being directly tied to election results—it is simply that in this cycle, one can clearly see that BTC's sensitivity to macro risk appetite has been maxed out.
So, how much real destructive power does a macro shock like the midterm elections actually have historically?
"Always Down in Election Years" Does Not Hold
We pulled BTC price data around the past four U.S. midterm elections (2010, 2014, 2018, 2022) and found that in the real market ledger, the so-called "always down in midterm years" reflects a cognitive bias when confronted with the data.
Looking at the short-term effects of midterm elections, BTC shows violent shakeouts and divergent price action.
In 2018, one month after the election, BTC suffered a brutal shakeout that nearly halved its price, plunging 45.5% in a single month. But at the same time, in 2010, 30 days after the election, it rose 31.6% outright.
"Always down in midterm elections" does not apply to all fixed timeframes. This shows that in the short term, the election outcome did not immediately eliminate divergence but instead intensified the fierce battle between bulls and bears.
At the same time, this is only one variable, and BTC's market size, acceptance, and macro conditions differ across each 4-year cycle.
And in terms of long-term performance, in the year after the election, BTC almost invariably achieved positive returns.
The smallest gain appeared in 2014 (+23.0%), and the largest in 2010 (+1580.0%). The most typical case is 2018: the post-election decline did occur, but extending the holding period changes the result—one year later it still posted a positive return of 45.2%.
Liquidity Traps and Chip Redistribution
Large-scale capital is not afraid of long-term policy volatility; on the contrary, the short-term macro uncertainty brought by elections is precisely the natural scenario they use for chip rotation.
When facing risk-off sentiment around the election, highly leveraged longs and panicked retail investors on the exchange are highly prone to a stampede, handing over blood-soaked chips during the violent drawdown in the 30 days after the election. Smart money, meanwhile, precisely exploits the liquidity traps created by this macro noise to absorb retail stop-loss selling at low prices and complete long-cycle base position accumulation.
We also mentioned in another article that over the past month, on-chain whales have been accelerating their BTC accumulation, even hitting a new high since February of this year.
(Recommended reading: "Who Is Absorbing the Blood-Soaked Chips? On-Chain Data Reveals the Whale Accumulation Wave After BTC Fell Below $81,000")
For BTC, the so-called "midterm election curse" is more like a chip redistribution driven by macro noise. Capital that exits due to short-term macro panic ultimately tends to become someone else's excess return in their financial statements a year later.
(Risk warning: The historical data sample consists of only four instances, which is relatively limited. The current dollar interest rate environment and ETF capital structure differ significantly from past cycles. This article is only an objective data review and does not represent an inevitable future trend; participants in the secondary market should be vigilant against short-term liquidity risks.)
