Bitcoin recovers from initial dip after Democratic sweep of Congress

Bitcoin experienced sharp swings on Wednesday, initially declining after the Democratic Party secured control of both chambers of Congress, before staging a strong recovery.

The reasons behind the rebound are unclear, as a Democrat-controlled Congress likely points to greater fiscal discipline. It does not constrain President Trump's ability to impose tariffs or maintain the conflict with Iran.

This development should be negative for the economic growth outlook and consequently for risk appetite, unless the US-Iran war concludes.

The market may be responding to declining Treasury yields and a weaker US dollar, though this largely reflects the unwinding of crowded positions amid a less favourable fiscal outlook.

Going forward, attention will centre on US-Iran talks. A successful outcome could boost Bitcoin through improved growth expectations and positive risk sentiment. An intensification of the conflict, conversely, may provoke another downturn driven by heightened growth concerns and safe-haven demand.

BITCOIN TECHNICAL ANALYSIS – DAILY TIMEFRAME

The daily chart shows Bitcoin rebounding and approaching a downward trendline. Should the price reach this level, sellers are expected to defend the trendline, placing risk above it to target a decline toward the 75,000 level, aiming for a downside breakout. Buyers, meanwhile, will look for a break above the trendline to trigger a rally toward the 98,000 level, with 85,000 as the first target.

BITCOIN TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

On the 4-hour chart, a resistance zone is visible around the 78,600 level. Sellers may opt to split their positions due to the proximity of the downward trendline. They are expected to act around the resistance, with risk defined above it, to push prices toward new lows. Buyers, conversely, will seek breakouts to drive new highs.

BITCOIN TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

The 1-hour chart offers limited additional insight, as sellers have a favourable risk-reward setup near the resistance and trendline, while buyers require a break above the trendline to target new highs. The red lines indicate the average daily range for today.

UPCOMING CATALYSTS

Today’s calendar includes US ADP employment data and the ISM Services PMI. Tomorrow brings the latest US Jobless Claims figures. Friday ends the week with the US Nonfarm Payrolls report and the University of Michigan Consumer Sentiment survey.