The analytical team at XWIN Research Japan assesses the Bitcoin market as being in a post-decline phase, moving within a broad range under tight financial conditions. They believe the overall direction remains conditionally bearish, with no clear signs of a sustainable upward trend forming. Analysts emphasize that such a market structure is often observed during US midterm election years and is linked to heightened political and macroeconomic uncertainty.
Current State of the Bitcoin Market
XWIN Research views the current situation as a post-decline period where the price moves sideways without showing sustained growth. The report notes tight financial conditions that limit liquidity and constrain the formation of an upward trend. This combination sets the stage for increased market sensitivity to external shocks.
Impact of US Midterm Elections
During midterm election years, stock markets traditionally exhibit increased volatility and relative weakness, with Bitcoin responding similarly. XWIN Research highlights that the election impact is structural: political uncertainty heightens investors' risk aversion rather than triggering one-off panic sell-offs. As a result, markets remain more susceptible to any negative news or regulatory decisions.
Factors Amplifying Downward Movements
- Monetary tightening — liquidity reduction increases pressure on risk assets.
- Overall liquidity contraction in markets worsens downturns and limits price recovery.
- Derivatives sector — deleveraging processes in derivative instruments often intensify downward moves.
- High leverage levels among market participants make Bitcoin more sensitive to sharp price swings.
Together, these factors can accelerate declines and increase volatility during periods of macroeconomic and political uncertainty.
Historical Data Analysis
Analysts refer to CryptoQuant data and the behavior of the MVRV indicator in previous election years, when its value dropped to around 1 or below. Such a decline in MVRV reflected price compression near the average cost basis of market participants and was accompanied by liquidation phases and prolonged corrections. The report notes that the indicator typically does not lead the decline but records its aftermath, which is important to consider when interpreting signals.
Outlook for 2026
According to XWIN Research, the main scenario for 2026 remains Bitcoin price movement within a broad range amid heightened volatility. Analysts highlight several factors to watch, including Federal Reserve monetary policy decisions, budget negotiations in Congress, and developments in crypto market regulation. Monitoring these factors will help understand which drivers will dominate price dynamics.
Why This Matters
If you mine or operate mining equipment, the described risks mean that volatility and periods of price weakness may become more frequent soon. Policy tightening and deleveraging in derivatives can accelerate declines, impacting mining revenue and operational margins. Understanding the structural causes of volatility helps avoid emotional reactions to short-term moves and build protective measures in advance.
What to Do?
For a miner with one or a hundred devices, the practical set of actions remains straightforward: control costs, monitor liquidity, and have a plan for a prolonged correction. It is recommended to maintain reserves for electricity payments and equipment maintenance to withstand periods of price compression.
- Assess production costs and adjust critical machines if necessary; this helps preserve margins during price drops.
- Monitor market sentiment and derivatives metrics — deleveraging can amplify short-term downturns.
- Keep cash reserves to cover payment delays or temporary shutdowns of part of the fleet to avoid forced sales at loss-making prices.
For a deeper understanding of how structural market changes have impacted Bitcoin previously, see the article on the structural shift in 2025. To view examples of selling pressure and its consequences, the article on selling pressure is useful. For context on network metrics reflecting the overall market picture, refer to the review on network indicators.