XWIN Japan2026-03-20

Bitcoin in a Midterm Election Year — Structure of Decline and 2026 Outlook

Looking at past U.S. midterm election years (2014, 2018, 2022), Bitcoin saw average declines of over −60%, followed by strong recoveries of more than +50% in the 12 months after. This reflects a consistent pattern: weak before the election, strong after. As discussed in our previous report, “A Cautious Market Structure in U.S. Midterm Election Years” (XWIN Research, Jan 2, 2026), this trend is driven by rising uncertainty and reduced risk appetite. As elections approach, investors scale back positions, leading to lower liquidity and downward pressure on prices. This is amplified by macro conditions such as higher interest rates and a stronger dollar, both of which weigh on risk assets. Bitcoin, due to its volatility, tends to magnify these moves. On-chain data supports this. Active addresses typically decline into election periods, signaling reduced participation and weaker demand. This creates a “lack of buyers” environment, making prices more sensitive to selling pressure. Looking ahead to 2026, three scenarios emerge: Scenario 1 (Bearish, ~50%) Uncertainty and tight conditions persist. A short-term rally in April–May, driven by CLARITY Act expectations, fades as liquidity weakens. BTC trades in a volatile 65K–75K range, forming a “zebra market.” Scenario 2 (Neutral to Recovery, ~30%) Post-election clarity improves sentiment. ETF inflows resume, participation recovers, and BTC trends upward into the 75K–95K range, with gradual higher highs. Scenario 3 (Bullish, ~20%) Regulatory clarity and favorable political outcomes trigger strong inflows. Participation surges, pushing BTC into the 90K–120K range or higher. In conclusion, midterm years are defined not just by price declines, but by reduced liquidity and participation. If this pattern holds, 2026 is likely to see weakness before the election and recovery after.