Bridgewater Associates founder Ray Dalio points out that the US political power structure has a history of "reversing every two years." With rising inflation and cost of living issues, the 2026 midterm elections may lead to a major shift in congressional power, further weakening the Trump administration's policy impetus and even affecting the deregulation process that the crypto industry currently relies on.
Rising inflation and cost of living pressures could trigger a shift in the political climate.
Dalio stated that, based on historical experience, political power in the United States typically experiences a significant shift every two years because the ruling party often "makes too many promises during the campaign but struggles to fully deliver on them in practice."
He pointed out that the "affordability" issue is likely to become the core political issue in 2026, which would be detrimental to the Republican Party. He anticipates that the Republican Party may lose control of the House of Representatives as a result, leading to political chaos in 2027 and setting the stage for a highly uncertain political situation in the 2028 presidential election.
The two-year golden period is limited, and the midterm election may weaken Trump's governing space.
Dalio further explained that the design of the American democratic system means that presidents often only have the first two years after taking office to implement sweeping policies.
He stated bluntly that President Trump currently enjoys a "two-year uninterrupted window of opportunity to govern," a window that is highly likely to narrow significantly after the 2026 midterm elections, or even be completely reversed after the 2028 elections. He also pointed out that in recent years, long-term rule by a single party has become quite rare.
With only about 5 seats in the House of Representatives, the risk of a reversal is relatively high.
Currently, the Republican Party holds a slim majority of only about five seats in the House of Representatives, making its political structure quite fragile. Predictive market data also indicates a significant chance that the Democrats will regain control of the House. According to Polymarket 's betting results, the probability of the Democrats regaining control of the House in the November election is approximately 79%.
Policy dividends boost industrial development, but political variables are amplified simultaneously.
Since Trump's election, cryptocurrency companies have become one of the major beneficiaries of the Trump administration's technology-oriented policies. The policies implemented have focused on the development of digital technology and AI, indirectly leading to a significant shift in the direction of US cryptocurrency regulation, moving towards a more favorable legislative and policy environment.
However, such policy benefits are highly dependent on the stability of the congressional power structure. If the congressional power changes after the midterm elections in 2026, the regulatory approach that was originally biased towards the crypto industry may face the risk of being overturned or interrupted before the key bills are enacted.
The legislative timeline is affected by the election, and legislative momentum may cool down rapidly.
Among the many bills, the "CLARITY Market Structure Act," which has attracted the most market attention, is a prime example of political calculations surfacing early on.
According to an analysis by investment bank TD Cowen, some Democratic lawmakers anticipate a potential power shift in the 2026 midterm elections and have therefore deliberately delayed the relevant voting schedule, waiting to reorganize after the elections. This means that the bill may not make progress until 2027 at the earliest.
Back in 2024, Joe Doll, general manager of the NFT trading platform Magic Eden, pointed out that under the current political structure, the Trump administration and pro-crypto lawmakers have very limited time to effectively advance policies, with only about two years left. With the House seats already very close, once Congress splits, related policies and legislation often stagnate or even freeze completely, and the subsequent development remains to be seen.
This article, written by Ray Dalio, warns that with the 2026 US midterm elections approaching, the momentum of Trump's policy implementation is under pressure. It first appeared on ABMedia, a ABMedia .
