Ray Dalio Predicts 2026 Midterm Elections Could Reverse Trump Crypto Policies

TLDR

• Ray Dalio predicts Democrats have a 78% chance to win control of the House in the 2026 midterm elections, which could reverse Trump’s crypto-friendly policies
• The US dollar fell 39% against gold in 2025, with gold returning 65% and outperforming the S&P 500 by 47%
• Nearly $10 trillion in US debt needs to be rolled over, creating fiscal pressure that makes debt assets look unappealing
• The CLARITY Act crypto bill may be delayed until 2027 as Democratic lawmakers anticipate gaining power after the midterms
• Bitcoin and Ethereum remain in consolidation while gold rose 69% and silver surged 161% over the past year

Billionaire hedge fund manager Ray Dalio says the 2026 US midterm elections may shift congressional power to Democrats. This change could reverse regulatory policies under President Donald Trump and the Republican Party.

Dalio believes affordability issues will drive voter decisions in the upcoming elections. “The affordability issue will probably be the number one political issue next year, contributing to the Republicans losing the House,” he said.

Republicans currently hold a narrow five-seat majority in the House of Representatives. Traders on prediction market Polymarket give Democrats about a 78% chance of taking control of the House in November.

The crypto industry has been one of the biggest beneficiaries of Trump’s tech-focused policy agenda. A shift in power threatens to undo pro-crypto regulatory changes before key legislation becomes law.

Crypto Legislation Faces Delays

The CLARITY market structure bill may be delayed until 2027 according to investment bank TD Cowen. Democratic lawmakers are anticipating a power shift and delaying votes until after the elections.

Dalio noted that political parties typically overpromise and underdeliver. This pattern causes the balance of power to shift every two years.

The US dollar faced pressure in 2025, falling 39% against gold. Gold returned 65% in dollar terms, outperforming the S&P 500 by 47%.

The S&P 500 fell 28% when measured in gold terms. European stocks outperformed US equities by 23% and Chinese stocks by 21%.

Fiscal Pressures Mount

The dollar’s decline stems from structural fiscal imbalances. Nearly $10 trillion in debt will need to be rolled over, Dalio wrote in his year-end reflection.

The Federal Reserve’s easing to push real interest rates down makes debt assets look unappealing. Dalio expects a further steepening of the yield curve.

The US bond market entered 2026 with its steepest yield curve since 2021. The spread between two-year and 30-year Treasuries reached 140 basis points, according to Bitfinex analysts.

This reflects markets expecting policy rate cuts while demanding higher compensation for holding long-term government debt. Inflation uncertainty and heavy Treasury issuance drive these concerns.

Geopolitical shifts in 2025 moved from multilateralism to unilateralism, Dalio observed. This raised conflict threats and contributed to increased use of economic sanctions and protectionism.

Long-term Bitcoin holders stopped selling for the first time since July. Ethereum showed improving fundamentals, including a cleared staking exit queue and record transaction activity at historically low fees.

Ehsani projects Bitcoin could reach $130,000 and Ethereum $4,500 in Q1 2026 once precious metals momentum fades.

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