Bitwise CIO: US midterm elections have limited impact on cryptocurrencies, demographics are the key

Author: Matt Hougan, CIO of Bitwise

Translated by: TechFlow

TechFlow Digest: The "blue wave" sweeping through the U.S. midterm elections has returned control of both chambers of Congress to the Democratic Party, sparking market concerns over renewed tightening of cryptocurrency regulations. However, Bitwise CIO Matt Hougan points out that the election did not disrupt the balance of pro-crypto seats in Congress. The pro-crypto majority in the new Senate and House remains intact.

In his view, what will ultimately determine the industry’s long-term trajectory is not partisan turnover, but the increasingly youthful demographic makeup of Congress. The newly elected senators are, on average, 14 years younger, with at least 94 Gen Z and millennial lawmakers entering the House. Despite short-term political uncertainty potentially triggering volatility, mainstream segments like Bitcoin and stablecoins remain resilient.

Congress Turned "Blue," But Got Less Gray.

Politics has traditionally been a highly sensitive subject that people avoid touching, but today, let’s discuss politics—or at least the portion directly relevant to cryptocurrency.

Last week’s "blue wave" engulfing the U.S. midterm elections handed the Democrats control of both congressional chambers. They flipped at least seven seats in the Senate (potentially nine by the final count) and reclaimed a substantial number in the House.

Senator Elizabeth Warren (D-MA), known for rallying an "anti-crypto army," is now highly likely to become the next chair of the powerful Senate Banking Committee, granting her the authority to launch investigations into any sector she chooses.

You might see this as an absolute disaster for cryptocurrency. In the short term (meaning the next few weeks), I agree the market will likely face genuine, sharp volatility amid concerns over policy directions under Democratic control.

But looking further ahead, I am not concerned. In fact, I view any pullback fueled by election sentiment as a likely buying opportunity. This is not blind optimism on my part; I have hard data to back it up.

Demographics Are the Political Equalizer

Consider a counterintuitive fact first: While last week’s election dramatically reshuffled the power dynamic between Democrats and Republicans, it barely shifted the balance between the "pro-crypto" and "anti-crypto" factions inside Congress.

According to Stand With Crypto, a crypto lobbying group, the new Congress will include 51 "pro-crypto" senators (lawmakers who received an "A" or "B" rating on crypto policy). By comparison, the previous Congress had 52, making this hardly a "tsunami-level" disruption.

As for the House, while many districts are still awaiting final tallies, Stand With Crypto has already confirmed at least 241 pro-crypto members among them. Out of 425 lawmakers, that comfortably secures a majority.

You might be wondering: "What’s going on? I remember the prior Democratic administration was openly hostile to crypto. Isn’t this blue wave purely bearish?"

But the key takeaway is that last week’s election was not just a political wave, but a demographic one. Data shows the newly elected senators are, on average, 14 years younger than their departing counterparts, with the number of senators under 50 nearly doubling from eight to fifteen. Furthermore, the new House will welcome at least 94 Gen Z and millennial members, a steep increase from the previous session.

In other words, Congress did turn "blue," but it lost some "gray hair."

People often underestimate how crucial generational demographics are for crypto adoption. As people age, they accumulate wealth and wield greater influence, eventually assuming leadership roles in major institutions. On average, these generations are far more comfortable with the technologies they grew up alongside.

That said, according to a recently publishedsurveyby Charles Schwab, millennials hold cryptocurrency at a rate (33%) more than four times that of Baby Boomers (8%).

Take Texas’s newly elected Democratic Senator James Talarico as an example. At just 37, he will become the nation’s youngest senator when he takes office next January.

Bitcoin has essentially accompanied him throughout his entire career. Unsurprisingly, he earned an "A" rating from Stand With Crypto; while serving in the Texas Legislature, he voted twice to support establishing a state Bitcoin strategic reserve.

Of course, this doesn’t mean crypto will sail smoothly under a Democrat-controlled Congress. I expect a wave of high-profile investigations targeting Trump-linked ventures like Trumpcoin and World Liberty Financial, along with fresh regulatory hurdles in areas such as prediction markets.

As I noted earlier, market conditions over the coming weeks or even months may well prove challenging. Yet for the core sectors that truly represent the mainstream direction of cryptocurrency (namely Bitcoin, stablecoins, and asset tokenization), I believe the overall outlook remains solid. Demographics, after all, are destiny.