Is Political Gridlock Actually Good For Bitcoin? The Answer Might Surprise You.

The recent midterms saw Democrats take control of both the House and Senate, which has caused some Bitcoin (BTC +1.03%) supporters to worry about the cryptocurrency's price dropping over 6% in the past week. They fear that political gridlock in Washington, with President Trump's veto power over any legislation, could negatively impact Bitcoin. While this is a concern, historical data suggests that political gridlock may not harm Bitcoin much, if at all, and could even be beneficial.

During the period of gridlock in 2023-2024, Bitcoin's value surged from $16,541 at the beginning of the year to $93,429 by the end, representing a staggering 460% increase. This significant growth occurred despite the unprecedented level of gridlock, with the 2023-2024 Congress passing only 42 bills by March 2024, the lowest since 1989-1990.

However, it is important to note that unified control of government did not lead to favorable outcomes this year, as the Clarity Act, a comprehensive crypto regulation bill, failed to pass through a procedural vote on September 15, despite Republicans holding all branches of government. Moreover, existing legislation remains in effect during gridlocked periods, preventing the president from easily reversing executive orders.

For example, Trump's Strategic Bitcoin Reserve executive order, which prohibits the sale of coins in the reserve, would require a veto-proof majority to amend.

Looking ahead, regulators are actively advancing new crypto regulations without legislative input. The SEC proposed new crypto rules on August 18, while the CFTC began rulemaking on October 5. Although these regulations may not directly affect Bitcoin, they could ultimately impact the landscape for newer tokens. Since Bitcoin's scarcity is a key factor in its value, gridlock is unlikely to impede its long-term price increase.