Probability of Democrats sweeping both houses rises to 99%: BTC falls below $76,000

According to Woofun AI, the drastic changes in the political landscape triggered by the US midterm elections are rapidly spreading to global risk assets, leading to widespread sell-off in financial markets. Bitcoin's price fell below the critical psychological threshold of $77,000 and dropped further to around $76,400 as expectations of Democrats taking control of both houses of the Senate and the House of Representatives increased.

This fluctuation is not an isolated event; it is a direct reflection of increased macroeconomic policy uncertainty. Market participants are repricing the sustainability of the Trump administration's tax cuts and deregulation policies, fearing that the Democrat-led Congress will implement a stricter regulatory framework for large tech companies and the AI industry, triggering capital withdrawal from high-risk assets.

This risk aversion is not only reflected in the cryptocurrency market, but has also triggered a ripple effect in US stock index futures and major Asian stock markets, showing that political risk premiums are rising rapidly.

Judging from the specific progress of the election vote count, the Democratic Party's performance in several key states exceeded expectations, directly shaking the traditional dominance of the Republican Party. In the battle for power in the Senate, Democratic Senator Jon Osoff's re-election in Georgia is a foregone conclusion, while in North Carolina, Democratic candidate Roy Cooper successfully took the seat originally held by the Republican Party. These two victories enabled the Democratic Party to achieve a key breakthrough in the number of seats and is expected to become the majority party in the Senate. What is more remarkable is the intense rivalry in Texas, a region where the Republican Party is traditionally strong. Democratic candidate James Talarico and Republican candidate Ken Paxton are in a tug-of-war. Voting results in some regions show that the Democratic Party is temporarily in the lead. According to Associated Press data, when the entire state had counted nearly 70% of the votes, Talarico won 58.9% of the vote and Paxton had 39.5% of the vote.

Although the statewide vote count is not over yet, Texas has been the central stronghold of the Republican Party in the US Senate elections since the 1990s, and the Democratic Party's potential breakthrough here is extremely symbolic and substantial. Predicting changes in market data further confirms this trend. On the Polymarket, the probability of the Democratic Party sweeping both houses once rose to 99%; on the Kalshi platform, the probability of the Democratic Party winning the Senate was about 98%, and the probability of winning the House of Representatives was about 99%. These surges in forecast data reflect market capitals' high level of confidence in the transfer of political power, which in turn has exacerbated asset price fluctuations.

According to data compiled by Woofun AI, the reaction of the financial market showed clear segmentation characteristics, and technology stocks became the hardest hit area for sell-off. US stock index futures fell across the board, with Nasdaq 100 futures falling about 2% intraday, S&P 500 futures falling about 1%, and Dow Jones Industrial Average futures falling about 0.3%.

This decline is mainly due to investors' concerns about the tightening of regulations on industries related to artificial intelligence. The Asian market was also not spared. The Korea Composite Index reported 5,445.93 points, down 3.59% from the closing of the previous trading day at 5,648.79 points; Japan's Nikkei 225 Index also fell 3.5%.

Notably, the Korea Composite Index showed an upward trend when it opened on the same day, but market sentiment quickly reversed as the US midterm election counting process progressed. Since technology stocks such as semiconductors account for a relatively high share of the Korean and Japanese stock markets, they are extremely sensitive to changes in investor sentiment in American AI-related stocks. Chris Weston, the head of Pepperstone, analyzed that depending on the extent to which the Democratic Party won and whether the Republican Party can maintain its seat in the Senate, investors' positions may be adjusted greatly.

This cross-market linkage effect shows that global capital is rapidly adjusting its risk exposure based on the redistribution of US political power.

In the field of digital assets, changes in the political landscape have had a particularly profound impact on policy prospects. If the Democratic Party can control both houses of Congress, important legislative plans, including the Clarity Act (CLARITY Act), could be affected or even put on hold. In particular, given the major hacking incident that Binance experienced last month, future regulatory requirements for exchange security and investor protection are expected to be further strengthened, which may reduce the crypto industry's room for innovation and increase compliance costs. On the technical side, it is critical that BTC can hold the $76,000 mark. Digital asset trading firm Wintermute previously indicated that $76,800 (the 50-week moving average under its caliber) is an important support level. Once this price level is effectively broken through, the price of the currency may face greater downward pressure. As of 12:40 p.m. Korea time on the 4th, the transaction price of BTC on CoinMarketCap was $76,400.79. Although the 24-hour decline was about 0.6%, the selling pressure continued to increase as the counting process began in full swing.

This price level tests not only the effectiveness of technical support, but also the market's ability to withstand long-term policy uncertainty. If the Democratic Party finally establishes a majority in Congress, the crypto industry may face a stricter regulatory environment, which in turn affects its valuation logic. Conversely, if the Republican Party can hold a key seat, market sentiment may recover after short-term fluctuations. Currently, $76,000 has become the core battleground in the long and short game, and its gains and losses will determine the direction of the subsequent market.