As November approaches, the White House is turning its attention to retaining control of Congress. On 3 Nov, voters will elect 35 senators and all 435 members of the House. Republicans currently hold 53 Senate seats and 217 House seats. Any shift in either chamber would limit President Donald Trump’s ability to advance his agenda over the next two years.
Trump effect
Midterms are widely viewed as a verdict on the sitting president. The party in power has historically lost ground in both chambers once the momentum of the previous presidential campaign fades.
Trump ran on finishing "endless" wars and taming inflation. Instead, his administration has overseen renewed fighting in the Middle East, tariffs that have pushed up consumer prices and the president has openly embraced higher inflation. By the end of May, fuel prices had climbed by roughly one-third, feeding through to broader inflation readings and higher inflation expectations.
Economic conditions remain central to voter sentiment. A YouGov/The Economist poll found that inflation is Americans’ top concern (29%), followed by jobs and the economy (15%) and health care (9%). The high inflation seen during the Biden years was one factor behind Democratic losses in 2024.
Recent polling shows weakening economic perceptions are already damaging Trump’s standing. His net approval rating on the economy has dropped to –34, the lowest of either term, according to YouGov.
Academic research supports this reading. Economists Riaño and Trebbi found that declines in real wages – wages adjusted for inflation – correlated with stronger Republican support in the 2024 presidential election. Bureau of Labor Statistics data show real average hourly earnings in May were lower than a year earlier.
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Outlook for Congress
Republicans face their biggest risk in the House, where Democrats need just three seats to reach the 218-seat majority. Since 1950, the party holding the White House has lost an average of 24 House seats in midterm elections. Multiple forecasts, including Race to the WH, Ipsos, the Cook Political Report and Polymarket, currently expect Democrats to take control.
The Senate map is more favorable to Republicans. They hold 53 seats to the Democrats’ 45, with two independents who usually vote with the minority party. To win a majority, Democrats would need to flip at least four Republican seats without losing any of their own. Of the 35 contests on the ballot, 20 are Republican-held, 13 are Democratic, and two are special elections created by the departures of JD Vance and Marco Rubio into the administration.
Most races are considered safe. The outcome will likely be decided in a handful of competitive states, particularly North Carolina and Maine. A Democratic takeover of the House remains the more probable result.
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Market implications
Election results shape market performance by changing the balance of power between the White House and Congress. When one party controls both chambers, the president faces fewer legislative hurdles. When power is divided, gridlock tends to increase.
Data since 1950 show that average S&P 500 returns have varied depending on the post-election balance of power. When the president’s party retained unified control of Congress, average returns reached 14%. When the president governed without unified support – the more common outcome – average returns were around 8%. The scenario in which Republicans retain both the White House and Senate after November has occurred only three times since 1950, with average returns reaching 30%, though the sample size is small.
Political risks, waning influence
The November vote carries direct political risks for Trump. A Democratic House would likely launch renewed impeachment proceedings and multiple oversight investigations, constraining the administration on defence and foreign policy. Trump himself has acknowledged the danger, telling House Republicans that "you got to win the midterms. Because if we don’t win the midterms…they’ll find a reason to impeach me."
Losing the House would probably accelerate the decline of Trump’s dominance inside the Republican Party as attention shifts to 2028. Even a narrow Republican hold would leave him facing a more independent-minded Congress. Early signs of eroding influence have already surfaced, including a House resolution aimed at limiting further strikes on Iran without congressional approval and a Supreme Court ruling that curtailed unilateral tariff authority.
A Democratic House would effectively end Trump’s legislative agenda for the rest of his term, increasing reliance on executive orders. Foreign policy would remain one of the few areas where he could still act with relative independence.
What it means for crypto
Trump campaigned on a pro-cryptocurrency platform and has delivered several concrete policy wins. He signed an executive order creating a Strategic Bitcoin Reserve, a government-held stockpile of Bitcoin treated as a strategic national asset. He also signed the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), which established the first comprehensive federal regulatory framework for stablecoins and banned central bank digital currencies (CBDCs) from being issued in the United States.
These steps have been offset by significant conflicts of interest. Trump disbanded the National Cryptocurrency Enforcement Team (NCET), the Justice Department unit responsible for investigating crypto-related crime. At the same time, he and his family launched multiple cryptocurrency projects. According to Reuters analysis, these ventures generated an estimated $2.3bn in profits for the Trump family through early exits, often at the expense of later investors.
Crypto-focused Super PACs – political action committees that can raise and spend unlimited funds on elections but cannot coordinate directly with candidates or parties – have become major spenders in Washington. The most active are Fairshake and the Fellowship PAC.
While recent crypto legislation has drawn support from both parties, Democratic backing remains fragile. A Democratic House would likely trigger fresh scrutiny of Trump-linked crypto ventures and could slow or reverse parts of the current regulatory push. As the industry matures, its regulatory path is becoming less tied to any single political figure. At the same time, the gap between the administration’s pro-crypto policies and the substantial financial benefits flowing to the Trump family from its own ventures remains a clear point of vulnerability.
