A Point of Law

Yesterday the nation stopped to watch Point of Law storm down the Flemington straight and win the Melbourne Cup. Half an hour earlier, the RBA lifted interest rates yet again, to 4.85%. And speaking of law, America has voted in its midterms, with markets pricing the Democrats as heavy favourites to take control of both chambers of Congress.

The RBA Hikes, but Blinks

The hike was expected. The detail was not. The board split 6 to 3, with three members voting to hold at 4.60%. It is the fifth rise of 2026 and takes the cash rate to its highest level since 2008.

The bigger signal is what was left out. September’s statement promised to raise rates further if needed. Yesterday’s statement dropped that line. The RBA also revised its inflation forecasts materially higher and does not expect a return to the 2% to 3% target until late 2027.

The Aussie dollar read that as a peak and slipped back below 70 US cents. Markets now lean towards a hold in December.

For savers, the maths is still the same. A 4.85% cash rate against 4.3% inflation looks positive until tax is paid. On a 37% marginal rate, that 4.85% becomes about 3.1%, which is still behind inflation. The RBA can slow the leak. It cannot stop it.

America Has Voted

Polls close from 10:00 am AEDT today, and the count runs through our afternoon. Close Senate races may take days.

Betting markets moved further towards the Democrats on election day. Kalshi and Polymarket ended trading with the Democrats on about 94% to win the House and about 76% to 78% to win the Senate. Kalshi priced a full Democratic sweep at about 76% and a split Congress at about 20%.

As we set out yesterday, a Democratic sweep likely ends Trump’s $5,000 cheque pledge and stalls the CLARITY Act. A split Congress gets you much the same result through gridlock. In both cases, Washington keeps funding itself with borrowed money.

The one outcome that would move crypto policy quickly is a Republican hold on the Senate. Markets give it about one chance in four. If the Senate is where the surprise comes, it comes this afternoon.

Bitcoin Has Already Priced the Worst

Bitcoin is trading near $77,500 and has held its $76,000 lows through the vote so far. The selling came beforehand. More than $1.3bn of leveraged positions were liquidated on Friday alone, and US spot Bitcoin ETFs saw more than $1bn of outflows across Friday and Monday.

History says the volatility may not be over. Since 2014, every midterm has followed the same pattern for Bitcoin: a sharp fall first, then a recovery.

• 2014: Down 50% in 71 days, up 24.5% a year later.

• 2018: Down 50% in 38 days, up 44.9% a year later.

• 2022: Down 25% in 13 days, up 92.3% a year later.

That is three data points, not a law. Each of those midterms also landed in the bear phase of Bitcoin’s four-year cycle, so the cycle did as much work as the calendar. The difference this time is that the pain came early. Bitcoin is already about 39% below its all-time high going into the vote, not coming out of it.

Key Times Today (AEDT)

10:00 am: First polls close in Indiana and Kentucky.

11:00 am to 1:00 pm: The east coast and the Midwest close. Early Senate calls in Georgia, North Carolina and Iowa will set the tone.

3:00 pm: California closes. The House picture should be clearer by then.

5:00 pm: The last polls close in Alaska. Alaska is also one of the closest Senate races.

The Can, Still Kicked

Rates at an 18-year high in Australia. A Fed leaning towards another hike in December. A US Congress about to change hands. None of it changes the arithmetic.

US federal debt rose $422bn in October to a record $40.6 trillion. Since 1 July it has grown $1.2 trillion, or about $10bn a day. Last week the Treasury raised a record $839bn at auction, and most of it went to repaying debt that was already due. America now borrows just to stand still.

Both parties are still campaigning to spend, and neither is campaigning to balance the budget. The next test is the $41.1 trillion debt limit, which the Bipartisan Policy Center expects to be hit in 2027. Congress has raised or suspended it every time.

Point of Law won the Cup on merit. In Washington, the law that matters gets rewritten whenever the money runs out.

Bitcoin’s supply stays at 21 million, whoever wins the count.

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Stormrake Spotlight: Zcash (ZEC) ($1,221)

Source: https://www.tradingview.com/x/PxStBFw1/

ZEC bounced almost 8% off the 0.382 Fibonacci level yesterday, recovering nearly all of Monday’s drawdown. The bulls now need to push price back above the nearby moving average resistance. If they can’t, the bears will likely have taken control of momentum.

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BTC/USD Key Levels and Price Action:

Source: https://www.tradingview.com/x/48FMLB3V/

Bitcoin has formed a double bottom off last week’s lows. Yesterday’s dip to $76.3k held above that base, setting a higher low, and price has bounced 2% overnight. That is the first step in the bulls getting back into the picture. The shorter moving averages are also turning up beneath price. The next goal for the bulls is a higher high above $78.8k. Overhead, the longer moving averages are still sloping down, so the broader trend has yet to turn.

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*All prices are denominated in USD unless stated otherwise*

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Written by Alexandar Artis