Bitcoin $BTC$77,883.88 has erased its early losses and is steaming higher as U.S. midterm election uncertainty fades.
The largest cryptocurrency fell just below $76,000 early Wednesday as reports indicated Democrats were winning control of both chambers of Congress, a setback for pro-crypto President Donald Trump. It has since staged a V-shaped recovery, erasing its early losses. As of this writing, the cryptocurrency traded 0.5% higher on the day.
The sharp recovery reflects easing uncertainty, according to TDX Strategies founder Dick Lo.
“Bitcoin dropped initially in response to the Democratic sweep of the midterm elections, but has since recovered as a clear outcome resolves political uncertainty,” Lo told CoinDesk.
Lo explained that a Democratic-controlled Congress is generally viewed as less favourable for pro-crypto legislation, and divided government makes major, market-unfriendly policy shifts unlikely.
Still, President Trump can “govern through executive orders while leveraging his veto authority to counter Democratic bills, he added.
Nicolas Quatravaux, head of EMEA at Paradigm, the leading institutional liquidity network in crypto derivatives, made a similar point.
“The result itself wasn’t really a surprise. Polymarket had a Democratic win above 75% for a while. So overnight was less about the outcome and more about the uncertainty going away,” Paradigm said.
He said that overnight options traders were busy.
“On election day we printed about $660m notional of $BTC options blocks, more than double the day before. Roughly $420m of calls were bought vs about $105m sold,” Quatravaux said.
A call option is a bet that a price will rise. A put is a bet that it will fall. A block is a large trade negotiated privately and not placed on the open market.
Traders bought $230 million worth of bitcoin call options, betting on a rebound after the election result. Near the price low, others sold options to cash in on protective bets and profit from elevated volatility.
Bitcoin is not alone in recovering from early losses. Nasdaq futures have also pared their decline, trading at 28,200 points at the time of writing, down just 0.3% on the day after falling more than 2% earlier.
“With the results now confirmed, that uncertainty is gone, giving market participants confidence to re-enter the market. We’re also seeing the same price action on S&P and Nasdaq on Hyperliquid,” Martin Lee, head of insights at DWF Labs said.
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