US midterm election years have historically brought increased volatility to financial markets, with the S&P 500 experiencing average peak-to-trough drawdowns of about 16%, according to a report from Binance Research.
The analysis found that midterm cycles often represent the weakest period in the four-year US presidential market cycle as political uncertainty weighs on investor sentiment.
Digital assets appear to follow a similar pattern, with Bitcoin historically moving closely alongside equities during midterm election years.
Since 2014, Bitcoin has recorded an average decline of roughly 56% during midterm cycles, according to the report, reflecting the broader risk-off environment often seen in equity markets.
However, markets have historically rebounded once political uncertainty fades after elections.
Data cited in the report show the S&P 500 has produced positive returns in every 12-month period following US midterm elections since 1939, with an average gain of about 19%.
Bitcoin has also posted gains in all three post-midterm years on record, delivering an average return of roughly 54% during those periods.
At the time of reporting, Bitcoin price was $71,033.12.