Emre Yumlu 
The US midterm elections scheduled for the fourth quarter of 2026 are increasingly being viewed as more than just a political milestone. For financial markets—and particularly for cryptocurrencies—they may represent a critical inflection point. Market participants are debating whether shifting liquidity cycles and macroeconomic dynamics tied to the election window could set the stage for a broader crypto recovery.
US Midterm Election: Liquidity Over Politics
The core of the emerging macro thesis is straightforward: asset prices and liquidity conditions may matter more than the election outcome itself. Some observers point to early signals from betting markets suggesting relative Republican weakness, which could create incentives for policymakers to foster more market-friendly economic conditions ahead of the vote.
Under this framework, a three-phase timeline unfolds. The first phase envisions a broader market correction in early 2026, accompanied by intensified criticism of Federal Reserve Chair Jerome Powell. The second phase anticipates mounting pressure by mid-2026 for a shift in monetary policy. Faced with economic and political constraints, policymakers could lean toward easing liquidity conditions. The final phase projects a recovery in asset markets during the second half of 2026, aligning with the election period.
“Structure First, Politics Later”
This perspective argues that rising asset prices tend to improve public sentiment rapidly. Dividend income, potential tax relief for small businesses, and an overall “feel-good” economic environment can reshape voter psychology. Conversely, during downturns, the Federal Reserve often becomes a focal point for blame, creating room for political narratives to evolve once liquidity conditions stabilize.
In this view, markets lead and politics follow. Structural liquidity trends shape economic momentum, which in turn influences political outcomes—not necessarily the other way around.
Lessons From 2024
A comparable pattern emerged after the 2024 election cycle. Following Donald Trump’s victory, cryptocurrencies rallied sharply, with Bitcoin reaching record highs amid expectations of a more crypto-friendly regulatory climate and supportive lawmakers. However, by early 2026, much of that post-election momentum had faded. Bitcoin retreated toward the $60,000 level as macroeconomic pressures mounted and initial optimism subsided.
Against this backdrop, the 2026 midterms are being watched not merely as a political event, but as a potential liquidity-driven catalyst that could redefine the trajectory of crypto markets.
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