Is Political Gridlock Actually Good For Bitcoin? The Answer Might Surprise You.
Key Points
Bitcoin tends to perform pretty well in periods when the U.S. political system is too dysfunctional to do much.
The new Congress is likely to usher in another such period.
There's no reason to panic here.
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Democrats swept the House and Senate in the Nov. 3 midterms, and that seems to have slightly rattled Bitcoin (CRYPTO: BTC) holders, with its price dropping more than 6% in the last five days. Some investors anticipate that the next two years in Washington will be political gridlock, as President Donald Trump will be able to veto pretty much anything that the new Congress proposes.
It's easy to envision how that could ultimately harm Bitcoin, as the Trump administration's preferred crypto policies will now have a much harder time advancing, and rules that regulators write without lawmakers can be reversed by a future administration. But I think political gridlock probably won't hurt Bitcoin much, if at all, and, based on historical data from similar situations, it might even help.
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Bitcoin gained 465% during the last stretch of split government
The last time Washington split power in this way, Bitcoin rose from $16,541 on Jan. 1, 2023, to $93,429 by Dec. 31, 2024, a 460% gain.
But how bad was the gridlock during that period?
Pretty bad, and it was without precedent in Bitcoin's history up to that point. With Democrats holding the White House and Senate, and Republicans holding the House, the 2023-2024 Congress enacted 42 bills through March 26, 2024, the fewest by that date since 1989-1990, per PolitiFact.
And investors would also do well to remember that unified control didn't help much this year, since the Clarity Act, the big crypto rules bill, failed to advance in a procedural vote on Sept. 15, while Republicans held both chambers of Congress and the White House.
Gridlock also means that existing legislation will remain in effect, and that Congress can't easily override the president's executive orders. For instance, Trump's 2025 executive order establishing the Strategic Bitcoin Reserve specifies that the coins in the reserve shall not be sold, and a new Congress would need a veto-proof majority to override that.
Should political gridlock change your Bitcoin investment plan?
There's little reason to change your investing habits regarding Bitcoin as a result of the election.
Regulators are planning to advance new crypto regulations without lawmakers' help. The Securities and Exchange Commission (SEC) proposed new crypto rules on Aug. 18, and the Commodity Futures Trading Commission (CFTC) began its own rulemaking process on Oct. 5.
Future regulators could be appointed to repeal those regulations, of course. Even so, most of the items on the docket do not pertain directly to Bitcoin, but rather to issues such as issuing coins as part of a business's capital-raising process and determining whether a given coin is a commodity or a security.
Those matters are less important for Bitcoin than for newer tokens. So, gridlock won't impede its continued increase in value over time, given its scarcity.
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Alex Carchidi has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
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