I think this crypto advance deserves attention, but not full conviction. Bitcoin rose 4.77 per cent to US$80,721.27 in 24 hours and led a broad move that lifted the total crypto market 4.73 per cent to US$2.69T. The move showed an 87 per cent correlation with the S&P 500 and an 86 per cent correlation with Gold. That relationship tells me the 1st engine came from outside crypto.
Traders reacted to fading political uncertainty after the US midterm elections, and the result sparked a relief move across crypto and traditional assets. The SPY ETF rose 1.47 per cent in the same period. A move that tracks stocks and gold this closely looks more like a shared macro recovery than a crypto-native breakout.
The backstory matters. Bitcoin had sold off sharply to US$75,700 yesterday after fears that a Democratic sweep of Congress could delay crypto-friendly legislation. When that political uncertainty faded, markets read the outcome as a return to policy stability. That shift fueled a rebound from an oversold condition. The move was less about a crypto-specific catalyst and more about macro relief. Demand was weak before the bounce because US spot Bitcoin ETFs had seen three consecutive days of outflows. That detail keeps me cautious. A relief move can run on positioning alone for a short time, but it needs spot demand to last. The key watch here is whether ETF flows return to net inflows.
The second engine was a violent short squeeze. Liquidation data showed more than US$386 million in short positions closed within 4 hours, and total crypto liquidations neared US$1 billion in 24 hours. Derivatives data showed a 314 per cent spike in Bitcoin liquidation volume over 24 hours, totalling US$366.58M. Short positions accounted for over 83 per cent of those forced closures, or US$305.22M. This forced buying accelerated Bitcoin’s climb back above US$80,000.
I see the squeeze as an amplifier, not the initial cause. Extreme leverage turned a macro rebound into a fast upward move. The danger now is that the same leverage can work in reverse. Funding rates and open interest deserve close attention. A continued decline in open interest could signal deleveraging and less volatile price action.
Also Read: US$1B ETF outflows, Democratic sweep highly likely, Iran war: Can Bitcoin hold US$75,600?
Bitcoin now faces a clear technical test. Immediate resistance sits between US$81,300 and US$82,000, where significant overhead supply exists. Support sits at the US$78,000 to US$79,000 band. The key trigger is whether spot buying and ETF inflows can support a sustained hold above US$80,076, the 50-day EMA. If Bitcoin holds above US$80,000, it will likely test the US$81,300 to US$82,000 resistance band.
A failure to reclaim this level risks a retest of support near US$77,000, with the US$77,000 to US$75,700 zone possible. A daily close above US$81,300 would confirm breakout momentum. A break below US$78,000 would signal weakness. I want confirmation from spot demand rather than another leveraged push.
The Layer 1 picture strengthens the case for a broader crypto recovery, but it also raises the bar for confirmation. Ethereum gained 5.06 per cent over 7 days, and the Layer 1 category gained 5.15 per cent, outperforming the total market’s 4.73 per cent rise. That outperformance suggests capital is rotating into foundational blockchains.
The move is not just Bitcoin-driven. It reflects renewed confidence in smart-contract platforms and their long-term utility. The immediate path hinges on Ethereum holding above US$2,400. The market is testing a key Fibonacci resistance at US$2.77T. A clean break above that level could target the US$2.83T swing high. Failure to hold the US$2.57T support from the recent swing low would likely invalidate the bullish structure and lead to a retest of lower levels.
Political risk adds a separate layer to this market. After winning control of both chambers, Democrats are signaling that Trump-connected crypto businesses will be a priority for congressional oversight. Incoming Senate Banking Chair Elizabeth Warren and expected House Oversight Chair Robert Garcia have both pledged to scrutinise Trump family ventures, including World Liberty Financial, its US$1 stablecoin, and related meme coins such as TRUMP and MELANIA, along with associated income streams and foreign investments. Reports describe planned subpoenas for ownership records, contracts, and communications.
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One investigation focuses on a large overseas investment that bought a major stake in World Liberty Financial and its bank holding company. World Liberty Financial runs US$1, a US$-pegged stablecoin, and a WLFI governance token, and has received preliminary approval for a national trust bank charter that Democrats already criticise as self-dealing. Warren and colleagues have requested detailed reviews of anti-money-laundering controls, foreign backers, and the bank charter process. They frame these ventures as potential national security and ethics risks rather than purely market projects.
That scrutiny matters for price behaviour. WLFI and TRUMP have already shown sensitivity to politics. They underperformed broader crypto on the Democratic sweep and, over the past year, suffered deep drawdowns relative to prior highs. Heightened oversight can mean more headline shocks, legal costs, and possible restrictions on how these products operate or are marketed, even if no wrongdoing is found. Exposure to Trump-branded tokens carries added political and regulatory risk on top of normal market volatility. I treat them as high-beta, high-uncertainty assets, not as clean expressions of the crypto advance.
Democratic committee control begins when the new Congress convenes in January 2027, when hearings and subpoenas could realistically start. Early signals to monitor include formal announcements of investigations by House Oversight or Senate Banking, any bills reviving ethics limits like the Stop TRUMP in Crypto Act, and whether market-structure efforts such as a successor to the CLARITY Act stall as oversight dominates the agenda. Because Trump can veto legislation, much of the action may happen through investigations and pressure on regulators rather than rapid new laws. That still matters for stablecoins, exchanges, and any project with high-level political ties.
Also Read: Bitcoin and Ethereum rebound through a shaky relief move
My conclusion is that the market outlook is cautiously bullish, but the advance needs confirmation from spot demand. Macro relief and a violent short squeeze restored bullish momentum. It did not prove durable organic buying. Bitcoin needs a daily close above US$81,300 to confirm breakout momentum and a hold above US$80,076 to keep the near-term bias positive.
Ethereum needs to hold above US$2,400 and the Layer 1 move needs to broaden. The key watch is whether US spot Bitcoin ETFs, which saw over US$1.16 billion in outflows last week, return to net inflows to validate this move. Political risk around Trump-connected crypto remains a separate test. I would separate macro beta from political beta.
The broad market can rise on relief and short covering while politically tied tokens face headline and regulatory shocks. That distinction is the most useful way to read this moment.
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