Red Wave or Blue Wave, the Deficit Keeps Its Seat
· Macro Analysis · Stormrake
- BTC
- ZEC
The RBA decides today, America votes tonight and the results land on our Wednesday. Here is what it all means for Bitcoin.
It is a big 36 hours. The RBA decides at 2:30 pm AEDT today, half an hour before the Melbourne Cup, and Americans start voting in the midterms tonight, our time. Results will flow through our Wednesday, though close races can take days to call.
Tomorrow we will cover the results. Today, we set out what markets expect and what each outcome means for Bitcoin.
The Pain Came First
Bitcoin enters election week having already taken its hits. It pulled back about 13% in October, from $87,400 to $76,141 last Friday, and more than $1.5bn of leveraged crypto positions were liquidated along the way.
The options market is charging very little extra for the vote. In late October, the election-week volatility premium was just 0.1 points, against 10.8 before the 2024 presidential election.
The calendar has also turned in Bitcoin’s favour. Last week was Bitcoin’s fourth straight red week, and in past bull runs, the week after four reds closed green 5 of 5 times. This week, election week, is week five.
First, the RBA
At 2:30 pm today, the RBA is widely expected to lift the cash rate a quarter of a point to 4.85%, its fifth hike of 2026 and the highest since 2008. All four major banks are calling a hike, with inflation at 4.3% over the year to September, well above the 2% to 3% target.
The Fed held last week, with markets pricing about an 85% chance of a December hike. In both countries, the next move is largely in the price already, and a hold today would be a welcome surprise for risk assets.
What the Betting Markets Expect
Prediction markets have swung heavily towards the Democrats. As of the weekend, Kalshi and Polymarket gave them about a 93% chance of winning the House and about 70% for the Senate, where Republicans currently hold a 53 to 47 majority.
Combined, that prices a Democratic sweep at about 70%, a split Congress with a Democratic House and Republican Senate at about 25%, and a Republican sweep at about 6%.
If Democrats Take Both Chambers (About 70%)
President Trump’s $5,000 cheque pledge falls away, and the CLARITY Act likely stalls. TD Cowen has warned a Democratic sweep could hold it up for two years.
The bullish read: the White House and its regulators stay in place until January 2029, and Bitcoin has already shown it can rally without CLARITY. In the three weeks after the bill failed in the Senate on 15 September, Bitcoin climbed from its mid-September low near $75,600 to $87,400.
The Democrats’ platform leans on fewer tariffs and more healthcare tax credits, both of which point to wider deficits. Gridlock with the White House means stopgap budgets and spending on autopilot.
If Congress Splits (About 25%)
A Democratic House and a Republican Senate is the classic gridlock outcome. The $5,000 cheque needs both chambers, so it falls away here too, and CLARITY still needs 60 Senate votes to advance.
With neither side able to force spending cuts through, budgets roll forward on stopgaps and the debt keeps compounding. That leaves the core debasement case for Bitcoin fully intact.
If Republicans Sweep (About 6%)
This is the long shot, and the most immediately bullish outcome: Trump’s $5,000 payment to every adult citizen, costing roughly $1.2 trillion and still needing approval from Congress.
That is more than two and a half times the first two rounds of Covid cheques combined. When Washington last mailed cheques at scale, Bitcoin went from about $10,000 in October 2020 to above $60,000 by March 2021. A Republican Congress could also bring CLARITY back largely as written.
Whoever Wins, the Can Gets Kicked
Markets have handled every combination before. Since 1950, the S&P 500 has been higher 12 months after each of the 19 midterms (19 of 19), whichever party came out on top.
Neither party is campaigning on shrinking a federal deficit running near $1.8 trillion. And under real stress, both parties have chosen the rescue: TARP in 2008 and the CARES Act in 2020 under Republican presidents, the American Rescue Plan in 2021 and the Silicon Valley Bank backstop in 2023 under a Democratic one (4 of 4).
Central banks can raise rates, but they do not write budgets. Here at home, with inflation at 4.3%, savings earning around the 4.60% cash rate leave most savers behind once tax is paid. That slow leak in the value of cash is the long-term case for Bitcoin.
Politicians do what wins votes. The $5,000 pledge arrived at a midterm convention, conditional on how Americans vote. Even former House Freedom Caucus chair Bob Good, a Republican, called it vote-buying. The Democrats’ answer is a cost-of-living agenda with its own price tag. Both sides are bidding for votes with money the Treasury will have to borrow.
Through all of it, Bitcoin’s supply stays capped at 21 million, whoever holds the gavel.
What We Are Watching
The RBA, 2:30 pm AEDT today. A hike to 4.85% is the expectation. The Governor’s media conference at 3:30 pm will show whether December is also in play.
First US midterm results, from about 10:00 am AEDT Wednesday. The last polls, in Alaska and Hawaii, close late that afternoon.
The Senate. The House is close to fully priced. The Senate is where a surprise could come from, and the surprise outcome, a Republican sweep, is the most bullish one for crypto policy.
Fifth red weekly candle. Bitcoin’s weekly candle closes at 11:00 am AEDT on Monday 9 November.
Iran (new development). Over the weekend and overnight, President Trump warned the US may eventually have to "give them the hammer" if talks fail, and reports say Israel is pressing for strikes after the midterms. Fresh fighting would risk another oil spike and a broad risk-off move, from global equities to crypto. For now, Trump says there is no rush while Qatari-mediated talks continue, and Bitcoin's $57,800 cycle low has held through this year's flare-ups so far.
Tomorrow we find out who won Congress, meanwhile, the deficit already has the throne and it isn’t going anywhere.
Stormrake Spotlight: Zcash (ZEC) ($1,152)
Source: https://www.tradingview.com/x/mF6WLJug/
Zcash (ZEC) had pushed lower with bears placed price at a low of $1,127 overnight with renewed Iran & US tension. Combined with the broader macro volatility discussed above over the next 24hrs, more consolidation and choppiness is to be expected until all these matters are in the rear-view mirror.
BTC/USD Key Levels and Price Action:
Source: https://www.tradingview.com/x/VfL0r6Gi/
Bears have naturally made a push in the early hours of this morning on BTC too, getting us back to the potential Higher Low pocket of price between $76,800 and $75,000. Off the back of renewed Iran tensions, it makes sense that we test this zone again right after the Binance hack. This is the zone Bitcoin needs to hold for the bullish structure since August to remain in-tact. Invalidation and trend reversal would be Bitcoin closing on the weekly, with two consecutive closes below below $75,000. On the other-hand, if the macro headwinds subside, expect to see a near V-shape reversal from this area too, sending us very quickly above $80K and beyond.
Either way, get ready for volatility - were about to enter a ranging period where only those with the utmost conviction can stick to their strategy without being chopped out. Historically, doing so has rewarded those in the past, no matter the narrative at the time as Bitcoin has gone on to make new all time highs each 4-year cycle.
*All prices are denominated in USD unless stated otherwise*
Written by James Ryan