Congress Changed Hands, While Bitcoin Round-Tripped It

Last week, I put the US midterm elections on your calendar as the next event risk. Well, the votes are in, a billion dollars walked out of the ETFs beforehand, and Bitcoin is back above $80,000 at the time of writing, roughly where it traded before the pre-election exodus began. Meanwhile, the DTCC switched on a tokenization service that election coverage buried, and MSCI's countdown has seven days left on it.

TL;DR

• Democrats won majorities in both chambers in Tuesday's midterms. Bitcoin slipped below $76,000 as results came in and has since recovered to above $80,000, completing a round trip that started when roughly $1 billion left the spot ETFs in the two sessions before the vote.

• The DTCC Tokenization Service went live commercially on October 28, following July production trades that more than 30 firms, including Goldman Sachs, ran on the platform.

• MSCI publishes the final list of digital asset treasury companies affected by its October 15 index rules on November 11, the countdown we broke down last week.

The Election Came and Went, and Bitcoin Round-Tripped It 🗳️

Democrats won majorities in both chambers in Tuesday's midterm elections, with the new Congress taking office in January.

Bitcoin, which had drifted down toward $76,000 as results came in overnight, recovered to around $77,900 within a day and has since climbed back above $80,000 at the time of writing.

The coverage attributed the move to election uncertainty clearing. This is what it looks like when an event premium gets priced in and then handed back, which is the same pattern you see after Fed days and earnings. The market was paying for insurance against a surprise, and there wasn't one.

The positioning ahead of the vote was arguably the louder signal. Spot Bitcoin ETFs shed roughly $1 billion across the two sessions before election day, including $643 million on October 30 that unwound four prior sessions of inflows, with BlackRock's IBIT accounting for $405 million of Monday's exits. By Tuesday, the bleeding had slowed to a comparatively mild $116 million, and even the people tracking these flows for a living admit nobody knows exactly who sold or why.

What does a changed Congress mean for the rulebook?

Nobody knows yet, and anyone claiming otherwise three days after the polls closed is guessing. Regular readers will remember the CLARITY Act failing to clear the Senate's 60-vote procedural threshold in September, with the vote at 49 to 50, after which the SEC and CFTC picked up the pen themselves. New majorities mean new committee chairs and new legislative math, and over the coming months we'll find out which agency initiatives accelerate and which get a harder look.

Grayscale's head of research argued last week that institutional adoption carries on regardless of the result, pointing to the tokenized funds and stablecoin work at BlackRock, JPMorgan and Visa. Time will tell whether the flows agree with him.

My take is the same take I would be writing under any election result. This is the fourth set of US elections I have watched while holding Bitcoin. Majorities have flipped back and forth through all of them, and the protocol added a block roughly every ten minutes without once asking who won.

Granted, policy matters enormously for the businesses built on top of Bitcoin, IY, and I will cover every twist of it here. The asset itself is a different animal, though, with no party affiliation and no election cycle baked into its monetary policy.

Weeks like this one are exactly why that property attracts serious capital. Bitcoin does not vote.

America's Settlement Core Went Live on a Ledger 🏗️

A week before the election, on the same day the Fed held, the Depository Trust & Clearing Corporation, the utility that settles the vast majority of US securities transactions, crossed a line worth marking: its DTCC Tokenization Service went live commercially on October 28.

This did not appear from nowhere. In July, more than 30 firms, Goldman Sachs among them, ran production trades on the tokenization service, with transactions running across Besu and Canton. These were production trades with live counterparties.

And a second product is right behind it. The separate Collateral AppChain, first announced in April 2025 and running Chainlink's runtime environment, is slated for this quarter. If you have been reading this newsletter since the BNY and Citadel tokenized repo story in October, or the Pontes launch in September, you already know where I file this.

With my CPA hat on, the story here is who did it, not what got launched. The DTCC is the deepest piece of market machinery in American finance, and incumbents don’t re-platform their core services for technologies they consider optional.

When the institution whose entire business is settlement decides tokenized settlement is the direction of travel, the debate about whether traditional assets end up on ledgers is functionally over.

One Week to MSCI's Verdict 📅

A short one, because we did the mechanics last week. The policy itself was settled on October 15. On November 11, MSCI will release the final list of affected constituents, with changes effective after the close on November 30.

Two things are worth watching beyond the headline names. First, whether the final list matches the preliminary one MSCI built on September 30 data, because additions or reprieves will tell us how the operating-assets screen behaves in practice. Second, whether other index providers signal anything in the days after, since the JPMorgan outflow estimates we cited last week scale sharply if MSCI's approach becomes the industry template. Next week's issue will cover the result.

One for the Calendar 🗓️

MSCI publishes its final affected-constituent list on November 11. The rules were set on October 15. Next Wednesday we learn, publicly, which companies with Bitcoin-centred balance sheets they actually catch.

Elsewhere in Bitcoin 📖

• Switzerland's first retail spot Bitcoin ETF, BIT Asset Management's BBIT, remains on track for a November debut on the SIX Swiss Exchange, with no listing date confirmed yet.

• Anthropic amended its IPO filing on November 2, with pricing terms still blank, keeping a potentially record-setting IPO on the calendar as an open macro event for risk assets.

ICYMI

Oh, yeah, and in case you mistook October 31 for Halloween instead of Bitcoin Whitepaper Day, I just want to remind you that 18 years ago Satoshi Nakamoto published the Bitcoin Whitepaper.

Your fellow stacker in sats,

Patrick Lowry

P.S. Want to know what Bitcoin's purchasing power says about the euros or dollars in your pocket? The latest Bitcoin CPI reading is live. Check it out here.

Proof of Words is for informational and educational purposes only. Nothing in this newsletter constitutes financial, investment, legal, or tax advice, or an offer or solicitation to buy or sell any security or digital asset. Opinions expressed are those of the author and do not necessarily reflect the views of Samara Asset Group. Always do your own research and consult a licensed professional before making any investment decision.