Bitcoin returns to $80,000 as Ethereum gains 6% in post-midterm rally

Bitcoin reached $80,000 again on Wednesday, leading a widespread cryptocurrency rally after the midterm elections. The Bitcoin advance caused short positions worth more than $320 million to be liquidated within 30 minutes. Ethereum rose 6%. XRP and Solana each gained 4%. Cardano advanced 4.5%. Dogecoin increased 3%.

The Kobeissi Letter said U.S. oil prices dropped below $93 a barrel following the election results. The Kobeissi Letter put the decline over the past four days at 12%. Lower oil prices reduce inflation pressure and provide further support for risk assets.

Crypto trader Michaël van de Poppe said the midterms established Bitcoin's bottom. Van de Poppe described the trading pattern as a textbook "sell the rumor, buy the news" setup. Scott Melker, host of The Wolf Of All Streets, said Bitcoin precisely retested the 50-week moving average during the election-day decline before recovering. Melker described that moving average as the boundary between bearish and bullish market conditions.

The Kobeissi Letter said the Dow Jones Industrial Average jumped more than 1,100 points at Wednesday's opening. The Kobeissi Letter said markets added more than $1 trillion in market capitalization during the initial reaction to the Democratic sweep. LMAX Group strategist Joel Kruger said markets had anticipated much of the election result, leaving limited scope for sharp moves. Kruger said even substantial Democratic majorities do not have enough votes to override a presidential veto. Kruger said declining political risk allows investors to buy market declines and reduce bets on dollar strength. Kruger said Treasury yields could decline further as traders lower expectations for Federal Reserve rate increases beyond December.

Michael Saylor highlighted victories by a Republican candidate for Florida governor who supported a U.S. Bitcoin reserve and a Democratic Senate candidate in Texas who supported a state reserve. Saylor wrote, "The case for holding Bitcoin crosses party lines." Senator-elect James Talarico, a Texas Democrat, won after voting twice for legislation establishing a state Bitcoin reserve that became law in 2025. Governor-elect Byron Donalds, a Florida Republican, won on a platform that included advocating federal Bitcoin reserve legislation.

Federal discussions about a possible U.S. Strategic Bitcoin Reserve remain underway. The debate has not resolved whether the government should purchase additional Bitcoin or retain only assets already seized through law enforcement.