Key Points:
- Bitcoin recovered from approximately $75,600 to around $78,300, reversing its initial decline after Democrats secured control of Congress in the November 3 U.S. midterm elections.
- Decentralized finance tokens led the recovery, with CoinDesk’s DeFi Select Index gaining approximately 5%, while Ethereum advanced 2% and the CoinDesk 80 Index rose 2.3%.
- Market sentiment remained cautious, with the Crypto Fear and Greed Index at 37, while Trump-linked tokens declined amid changing expectations for U.S. cryptocurrency policy.
Bitcoin staged a recovery on November 4 after briefly falling toward $75,600 as U.S. midterm election results pointed to Democratic control of Congress. The rebound brought the largest cryptocurrency back toward $78,300, while decentralized finance assets outperformed much of the broader market. The contrasting performance across digital assets reflects how political uncertainty, regulatory expectations and derivatives positioning continue to influence cryptocurrency valuations.
Bitcoin Reverses Election-Driven Losses
Bitcoin gained approximately 1.3% to $78,300 from midnight UTC, recovering from an early Wednesday decline to around $75,600. The initial sell-off followed indications that Democrats had won control of Congress, raising questions about the future direction of U.S. cryptocurrency legislation under a divided political environment.
However, the subsequent recovery suggested that investors were reassessing the immediate implications of the election outcome. Rather than extending the initial decline, market participants appeared to respond to the removal of electoral uncertainty and the possibility that major regulatory changes could face legislative obstacles. Bitcoin’s rebound therefore reflected a shift in short-term sentiment rather than clear evidence that political risks had disappeared.
Other major cryptocurrencies also advanced. Ether gained approximately 2%, while the CoinDesk 80 Index increased 2.3%, indicating that the recovery extended beyond Bitcoin and into the wider digital-asset market.
DeFi Tokens Lead the Market Rotation
Decentralized finance assets recorded some of the strongest gains during the recovery. CoinDesk’s DeFi Select Index rose approximately 5%, making it the strongest-performing sector index in the report. All seven of its constituent assets advanced, with Injective gaining approximately 6.2% and Ethena also contributing to the sector’s performance.
Venice token (VVV), associated with the artificial-intelligence platform Venice, led the CoinDesk 100 gainers, advancing around 7% since midnight UTC and 17% over 24 hours. Grass, Bonk, NEAR and Morpho each gained approximately 6%, while Zcash advanced 5% and recorded a 12% increase over the preceding 24 hours.
The strength in DeFi and selected altcoins suggests that traders were willing to increase exposure to higher-volatility assets as Bitcoin stabilized. Nevertheless, individual token rallies do not necessarily indicate a broad or sustained improvement in market conditions.
Derivatives Show Increased Trading Activity
Market-wide futures volume increased 27% over 24 hours, while open interest rose only 3%. This difference indicates that much of the activity involved traders opening and closing positions rather than a substantial expansion in outstanding leveraged exposure. Liquidations increased 22% to approximately $469 million.
The taker-volume ratio also shifted toward buyers, reaching 51.6% against 48.4% for sellers. Meanwhile, Bitcoin’s one-week implied volatility declined from approximately 41% to 34% after the initial election-related spike. The reduction suggests that demand for immediate volatility protection moderated as prices recovered.
However, positioning remained mixed. Zcash open interest increased 25% alongside a 14% price gain, indicating stronger participation in its rally, while NEAR’s open interest increased only 0.35% despite a roughly 7% price advance.
Political Tokens Lag as Investors Reassess Exposure
Not every segment participated in the recovery. The official Trump token (TRUMP) declined 7.1%, while World Liberty Financial (WLFI) fell 5%. Trump Media shares also traded 6.5% lower in premarket activity, reflecting broader weakness among Trump-linked assets following the Democratic victories.
Despite improving prices, the Crypto Fear and Greed Index remained at 37, indicating fear, while the Altcoin Season Index stood at 51. These readings suggest that the rebound had not yet translated into widespread confidence.
Attention now turns to Friday’s U.S. employment report, which could influence expectations for Federal Reserve policy and broader financial conditions. Bitcoin’s ability to maintain its recovery, alongside continued strength in DeFi and other altcoins, will help determine whether the latest move represents a durable improvement in market sentiment or a temporary rebound following political uncertainty. For institutional participants, derivatives positioning, volatility and capital rotation remain important indicators of the market’s underlying resilience.
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