Bitwise CIO calls post-midterm crypto dip a buying chance

Bitwise CIO calls post-election dip a buying chance

Matt Hougan, chief investment officer at asset manager Bitwise, wrote in his latest memo that any election-related pullback in crypto is a buying opportunity in his view. He acknowledged that higher volatility is likely in the coming weeks. The memo was published after the Democratic sweep in the U.S. midterm elections.

Hougan wrote that the long-term foundation of the crypto industry is not threatened by the midterms. He said parliamentary support for digital assets remains stable despite the changed majority. He also forecast higher volatility in the short term.

Crypto-friendly lawmakers in the new Congress

Data from Stand With Crypto cited by BTC-ECHO shows that the incoming Senate has 51 members rated positive on crypto issues, compared with 52 in the previous Congress. In the House, 241 of 425 members are rated crypto-friendly.

Hougan described the shift with a line quoted by BTC-ECHO: the Congress turned blue, but it also became less gray. Newly elected senators are on average 14 years younger than their predecessors, and the number of senators under 50 nearly doubled. At least 94 members of the House belong to Generation Z or the Millennials.

Demographics and crypto ownership

Hougan argued that this age structure will shape future regulation because younger generations grew up with digital technology. He cited a Charles Schwab survey showing that 33 percent of Millennials own cryptocurrencies, compared with eight percent of Baby Boomers.

He named James Talarico, a 37-year-old Democrat from Texas, as the youngest senator entering Congress. Talarico voted twice at the state level for a strategic Bitcoin reserve, a project usually associated with Donald Trump and Republicans. Hougan concluded with the saying that demography is destiny.

Trump-linked projects may face challenges

Hougan said Trump-linked projects such as World Liberty Financial and prediction markets could face challenges. He said core areas such as Bitcoin, stablecoins and tokenization are likely to stay on course because of the generational change.

James Butterfill, an analyst at CoinShares, said in a press release seen by BTC-ECHO that the election itself was never the decisive factor. He said real yields, dollar liquidity and demand for exchange-traded products matter more. For the Bitcoin price, the medium-term outlook therefore remains largely unchanged, according to Butterfill.

What is still open

The sources do not state whether Elizabeth Warren, the long-time Bitcoin critic expected to chair the Senate Banking Committee, has commented on the market reaction. They also do not say when the new Congress will take up crypto legislation.