2026-09-27 · Crypto

November 3rd: Will It Crash?

Here's how this started.

Last weekend I came across a piece in Lianhe Zaobao with a vicious headline — something like "a red undertow may drag the Republicans into the abyss."

I opened it, read a few numbers, and felt a chill down my spine.

Trump's disapproval rating: 60.4%, the worst of his two terms. With barely six weeks to the November 3rd midterms, the Democrats need a net gain of only three or four House seats to flip the chamber. And the Republican House Majority Leader — one of their own — said in an interview that they'd probably hold about 225 seats.

The majority threshold is 218.

A forecast from their own man, just seven seats above the pass mark.

Then came the more interesting part. A CNN poll shows 68% of registered voters consider the economy the issue that matters most to their vote — a number that usually sits below 50%. In other words, voters care about their wallets. And the Republican campaign is running on… crime, gender, immigration. They've handed their strongest card, the economy, to the opposition; the Democrats now lead on economic handling by seven points.

Years of trading have drilled one habit into me. When everyone is discussing the same thing, don't rush to pick a side — first ask whether the market has already digested it.

So today I want to work through three questions properly.

Will November 3rd bring a crash?

What happens if the Republicans really lose?

And over the next two or three years, where does crypto actually go?

Conclusion first, so you can't call it a tease. The probability of a crash on November 3rd caused by the election itself is low. What deserves your attention is the Fed meeting six days before it, and the debt-ceiling standoff in early 2027.

Why? Read on.

The election is already priced

The current numbers from forecasting models and prediction markets: Democrats win the House with 85–96% probability; the Senate at 50–59%. The national polling average has the Democrats up 6.9 points, across 649 polls.

Think about it: when an outcome has an 85%+ chance of happening, is it still a surprise?

Markets are never afraid of bad news. They're afraid of surprises. A Democratic win is the base case — priced in long ago. The Republicans unexpectedly holding both chambers is the low-probability event; that would bring a move, but not necessarily downward.

What people really fear in a Democratic win is twofold: a crippled, investigated, possibly impeached Trump administration; and tax hikes plus regulatory tightening. Both fears are real and I understand them completely. But look at the other side's actual position: even a Democratic sweep buys them veto power, not governing power. The Senate's 60-vote threshold is sitting right there — they can't pass major legislation. All they can do is block, not build. And blocking is a script markets know by heart: in the 2011 and 2013 divided-government debt-ceiling standoffs, the VIX spiked and came straight back.

By the way, the year after a midterm has historically been good for US equities — that's the presidential cycle. This round adds one variable: Trump's own unpredictability, with tariffs and fiscal policy able to lurch back and forth through any standoff. But that's a 2027 story, not a November 3rd story.

One more thing. At a midterm rally in Dallas, Trump put it bluntly: Republicans win, everybody gets a $5,000 "Trump dividend"; they lose, you lose the border, the tax cuts, your safety and your wealth. Framing the election as the end of the world is the campaign rhetoric both sides share — listen and move on. If the Democrats do win, the Republicans lose committees and the agenda, Trump becomes a lame duck, and the 2028 succession civil war starts early. What the Democrats get is a veto hammer. Washington goes on rolling through the same swamp as always.

The June wound: how 58k happened

At this point I have to revisit a scar a lot of people still carry.

On June 25th this year, Bitcoin was smashed down to $58,131 intraday — the lowest since September 2024. From last October's high of $126,198, that's worse than a halving. Within 24 hours, $1.26 billion of liquidations across the market, over 200,000 people, and the Fear & Greed index plunged straight into extreme fear.

When I later took that decline apart, it wasn't one piece of bad news. Four families of factors resonated in the same month.

First, macro. PCE inflation at a three-year high, jobs data beating expectations, rate-cut hopes killed outright, a stronger dollar, tightening liquidity. Note the sequence: the Fed hadn't acted yet — the market fell first, pre-pricing September's hike.

Second, the demand engine stalled. Spot Bitcoin ETFs bled for eight straight days; June's outflows exceeded $4 billion. The Coinbase premium index — a gauge of US institutional bid — was negative for two months running. The single most important absorbing force of the 2024–25 bull market temporarily vanished.

Third, the anchor of confidence blew itself up. Strategy — the former MicroStrategy, holding 845,000 BTC, more than 4% of total supply — sold for the first time in its history. MSTR fell 84% from its peak and "death spiral" was everywhere. At the same time, a Mt. Gox wallet moved another $950 million in Bitcoin. Supply panic stacked on top.

Fourth, leverage liquidations. Coinglass had flagged $1.6 billion of fragile longs stacked just below 58,131. Once the price broke through, liquidation triggered liquidation — longs hunting longs. A 20x long only needs half that drawdown to go to zero.

One month: from 73,500 to 58,400. Down 34% for the first half of the year.

I'm not digging this up to sell anxiety. It's that these four families of factors sit precisely among the highest-weighted nodes of the factor model I built for myself. I fed the June starting point of 73,500 and the factor readings of the time back in as a replay; the model's central estimate was 54,300.

The actual low: 58,131.

Six points off. Direction right, magnitude right, model slightly conservative.

That validation bought me real peace of mind. The worst-case numbers coming out of the engine now are not plucked from the air.

The model, briefly

A short word on method.

What I built is, honestly, a causal map. Bitcoin's drivers broken into a dozen-plus nodes — the Fed, inflation, global liquidity, regulation, on-chain valuation, miner state, stablecoin supply, leverage — each individually adjustable, weighted by historical regularities, transmitting layer by layer into a directional bias and a target price band.

The most important lesson from three years of building this is the sensitivity ranking. Each increment of Fed tightening drags Bitcoin down 6.3%. Each increment of global M2 easing supports it by 7.6%; stablecoin supply, 4.8%.

In plain language: the Fed can crash the market, but structural dry powder can offset it.

The board right now: stablecoin supply at $316 billion, an all-time high. On the miner side, the Hash Ribbons bottom signal — 84% historical win rate — triggered earlier this year. Leverage long/short ratio at 1.92, not crowded. Of June's four kill conditions, three have been dismantled: leverage flushed, ETF flows repaired, the supply event digested. The only one still hanging is the rate path.

So the October 28th meeting matters far more than November 3rd. The market prices a 57–66% chance of another hike there. If they add 25 basis points with a hawkisher dot plot, risk assets probably fall first. By the time election day actually arrives, the shock will have been largely digested.

November 3rd is the biggest piece of noise out there. It is not the signal.

The regulatory switch

Since regulation came up — everyone's whispering that the SEC chair is about to change. I went back through the rules; here's the practical version. The current chair, Atkins, took office in April 2025 and is plainly pro-crypto: dropped the Coinbase and Ripple cases, approved a stack of crypto ETFs, signed an MOU with the CFTC that put the agencies' years-long turf war on hold. A midterm election cannot remove him.

But the election does hold a switch: the CLARITY Act, the bill that divides crypto oversight between the SEC and the CFTC. It passed the House in July 2025, cleared the Senate Banking Committee this May, and then on September 15th the cloture vote failed. Stuck. It needs 60 votes.

Whether that bill revives depends directly on the election. Republicans hold the Senate: it passes in the lame-duck session or early 2027. Democrats take it: shelved, or gutted and rewritten.

So the election's real effect on crypto is to adjust the slope of regulation — not to reverse the direction of the trend. The direction is set by three bigger things: the Fed, global liquidity, and stablecoin dry powder.

Three scenarios

Feed today's price of 84,800 and all current factors into the model, and it gives three scenarios.

Note the asymmetry. The worst and the good scenarios are about the same size — roughly eighteen thousand dollars in either direction — while the base case just sits still.

In other words, unless the Fed takes an extreme path, this is probably a broad range between 75k and 110k until mid-2027.

Stretched over two or three years, here is my own read. From 2026 into the first half of 2027: a bottoming range, held up by stablecoin dry powder and ETF flows — uncomfortable, but no major leg down. If inflation trendically rolls over in 2027 and the Fed pivots, plus CLARITY passes even in diluted form, the conditions exist for a 2023-style recovery slope, with six figures above in reach. Conversely, if the Fed really delivers 50 basis points this year stacked on another confidence event, June's low gets retested.

Oh — and the four-year halving cycle? In my view it has been demoted to second-tier in the ETF era. Peak gains after successive halvings decayed from thousands of percent down to 98%, and the last cycle's top printed before the halving. Don't navigate new continents with an old map.

One honest disclosure before I close. This model is heuristic — the weights come from historical regularities and mechanism reasoning, not regression fitting. It helps me decompose a vague dread into individually monitorable nodes, but it guarantees no price level. In June it was six points more bearish than the market; next time it could run the other way. Tools are for thinking clearly, not for worshipping.

And one more thing. I said the Zaobao piece sent a chill down my spine. By the time I finished writing this, the chill was gone. It came from a scary-looking number, 60.4%; the steadiness came from walking the factors and finding that the market had already priced the most likely outcome. What loses people money is never the news — it's the position that wasn't prepared when the news landed.

The only question worth answering

Finally, the part that actually matters.

My biggest lesson from years of trading: prediction is the worst available answer to uncertainty. Especially for someone past the attacking years and into the defending ones — watching the screen all day waiting for a body blow is a game you don't sleep well after, even when you win.

Only one question is worth real money. If the worst case arrives and Bitcoin goes back to sixty thousand — does your position survive it?

That question needs answering now, not on the day it touches sixty thousand. If you can take it, then the election result, the Fed's next hike, whether CLARITY passes — you're a spectator to all of it. If you can't, the move is now, not when the tape drags you there.

Size your position from whether you can accept the worst case — never forward from how big the opportunity looks.

So the opening question has its answer. November 3rd will most likely be an unremarkable day — maybe some movement on the tape, then everyone turns to arguing about the 2027 debt ceiling.

And your job, before that day arrives, is to adjust the position until you can sleep through whichever scenario lands.

Markets open every day. Opportunities come every day. Capital, once gone, is gone for good.

None of the above is investment advice. Every price level here is a model projection, and the market will humiliate everyone in its own fashion — me included.

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