Every time it's an American midterm election year, the debate of "Should Bitcoin make a move in May" almost resurfaces: In May 2018, Bitcoin fell from around $10,000 to about $7,000; in May 2022, it again dropped around 30% from about $40,000 in another midterm election year, subsequently falling into the $20,000 range that year. "Sell in May" was later packaged as a seemingly reliable script. As we enter another midterm election year in 2026, this old topic is now framed within a new political and regulatory context: on one side is the end of Jerome Powell's term on May 15, with the U.S. Senate approving Kevin Warsh’s succession the day before with a vote of 54 to 45, as the Federal Reserve's leadership change prompts the entire risk asset market to rewrite interest rate and liquidity expectations; on the other side is the legislative game surrounding the CLARITY Act, which is seen as a key framework for reshaping crypto asset trading and market structure. NYDIG's research director Greg Cipolaro has also locked the "reality through the window" of market structure legislation, including the CLARITY Act, in the window from June to early August, meaning May is no longer just a technical seasonal node but a sentiment testing ground before and after the new chair's appointment, as well as on the eve of the legislative window: some firmly believe that the historical May correction in midterm election years will repeat, while others think that the true direction will be determined by how Washington’s new combination of monetary policy and regulatory rules are priced in by the market.

Historical May Corrections and Midterm Election Shadows

Looking back at the two most recent midterm election years, May left prominent creases in Bitcoin's price curve. In May 2018, Bitcoin dropped from about $10,000 down to about $7,000, with a monthly decline of about 30%. This downward segment was tagged by many as "Sell in May”, interpreted as investors being unwilling to hold positions amid regulatory and policy uncertainties during an election year. Four years later in 2022, the same situation occurred in the U.S. midterm election year, as Bitcoin again dipped about 30% from around $40,000 in May, subsequently further dropping into the $20,000 range. The impression of "pressure in May during midterm election years" transformed from a coincidence to a repeatedly cited "historical pattern."

These two movements make it particularly easy to fit the third midterm election year of 2026 into existing narratives: Analysts supporting the "Sell in May" script use the 30% corrections from 2018 and 2022 as samples to deduce a behavior pattern of "Washington political cycle + May reduction in holdings"; others remind that the real commonality is merely the three tags of "election year + May + decline." With only two samples, it's insufficient to prove that midterms themselves will crush prices nor can it rule out that other macro and regulatory events played a dominant role behind the scenes. For 2026, this history feels more like an old K-line repeatedly compared: it will affect sentiment and position adjustment pace, but it doesn't constitute an iron law. The real variables determining Bitcoin's fate this May still lie in the upcoming timeline of policy and regulatory landing.

Federal Reserve Leadership Change and Market Tension

This year, what truly influences the market is the timeline that has shifted from the election day to the leadership change day at the Federal Reserve. According to the established schedule, Jerome Powell's term as Fed chairman officially ends on May 15, 2026, and the day before, May 14, the U.S. Senate approved Kevin Warsh as the next Fed chairman with a vote of 54 in favor and 45 against. This personnel transition point, occurring less than 24 hours apart, was swiftly marked on the K-line chart by the market: reports surfaced from Chinese crypto media stating that the S&P 500 index peaked at around 7501 on May 14, while Bitcoin saw a pullback after a rally on May 15, creating a dramatic picture of the "leadership change day" and "rally followed by a downturn."

On such a narrative stage, finding "dramatic explanations" becomes easier than seeking data. Tom Lee proposed a logic that "the new Fed chair's appointment will trigger a market correction" which is now adopted directly by some media for May 2026: Senate voting, Powell's term end, and Warsh taking over, combined with the high retreats in the stock markets and Bitcoin around the 14th and 15th, all pieces are stitched into a single story — "the new chair’s appointment impacts risk assets." This interpretation has market traction because to most investors, the Fed chair symbolizes the monetary policy orientation for the coming years; if prices turn from rising to falling within this window, it can be easily attributed to the impact of the "new official taking charge." For crypto assets, this symbolic significance is even stronger: even if the asset itself operates on-chain, the pricing logic is still tethered to Washington's personnel and expectations. What is truly worth observing is not whether the "leadership change day" inherently brings about a sell-off, but whether the market is pricing a specific policy pathway or attributing excessive emotion and fear to a personnel transition point.

CLARITY Act Window: Legislative Gamble from June to August

From "who sits in the Fed chair" to "what on-chain assets are called in U.S. law," another narrative line from Washington came to the forefront after mid-May. NYDIG research director Greg Cipolaro provided a calm timeline: the most realistic window for advancing crypto market structure legislation, including the CLARITY Act, is from June to early August 2026. If negotiations, scheduling, and voting can be completed within this period, crypto asset trading and market structure could find a relatively mature regulatory framework during this Congress term; if this window is missed, as the election battle intensifies, any topics involving asset regulation could be embroiled in partisan conflict, with technical details relegated to the background.

Compared to this "realistic window," the July 4 "ideal passing day" proposed by White House crypto advisor Patrick Witt seems more like a politicized imagination — allowing the CLARITY Act to pass on the most symbolically significant Independence Day sends a signal to the market that the U.S. embraces innovation. NYDIG's assessment is noticeably more cautious: it does not deny the possibility of July 4, but reminds investors to not focus the gamble on a single date, rather to observe whether the law can accomplish key actions within the entire June to August window. The real pressure point is that if this window is missed, the legislation could likely be postponed until after the midterm elections, continuing to keep trading platforms, institutional funds, and project compliance paths locked in a "transition state" — platforms would struggle to make long-term investment decisions regarding future licenses and business boundaries, institutional funds would likely adopt more conservative allocation strategies in the U.S. market, and project teams may tend to observe and even relocate to reduce upfront investments in U.S. compliance costs while waiting for a clear, calculable set of rules. This is the true legislative gamble for June to August this year and one of the key variables for Bitcoin to escape the "midterm election year May curse" on the policy level.

Warsh Script Collides with NYDIG Warning

In this May correction, the narrative that first gained prominence was the "Warsh script," constantly reiterated by the media. Tom Lee proposed the path that "the new Fed chairman's appointment will trigger a market correction," which has now been applied to May 2026: the Senate passed the appointment vote for Kevin Warsh on the 14th, and Powell's term officially ends on the 15th. A Chinese crypto media source immediately used the image of the S&P peaking around 7501 and Bitcoin's high retreat that day to package the narrative as "the script coming true." For shorts betting on "Sell in May," this narrative provides a straightforward causation — the leadership change in Washington is merely a trigger, while historical May corrections in midterm election years are pieced together as evidence of a "cyclical curse."

On the other hand, NYDIG's research team took a completely different angle. Greg Cipolaro shifted the focus from short-term fluctuations in May to the legislative window in June to August, describing the market structure legislation window, including CLARITY, as the true "lifeline" for the crypto industry this year: If momentum is weak within these three months, the legislation is likely to be postponed until after the midterm elections, prolonging regulatory uncertainty for an entire political cycle. The bullish camp prefers to cite this narrative — not denying the May correction, but claiming that only once rules are finalized in Washington can the boundaries for platform licenses, asset classification, and trading structures be reshaped, and only then can prices potentially receive structural benefits rather than mere liquidity shocks. Thus, while both lines focus on Washington, one focuses on "leadership change triggering risk asset corrections," the other bets on "legislation landing resetting valuation anchors," with both paths simultaneously influencing Bitcoin's pricing expectations but pulling the industry's future toward starkly different imaginations of whether it tightens or releases in "affirmation."

Uncertain Rules This Summer: Suspense for Trading Platforms and Users

Since mid-May, when Washington entered the dual narrative of "leadership change + legislation," the risk premium in the crypto market is no longer merely a mechanical reproduction of the historical "May correction" sample, but is paying for two types of uncertainties: one is whether the monetary policy direction and tolerance for risk assets will shift after the leadership transition on May 15; the other is whether market structure laws, like CLARITY, can advance within the realistic window defined by NYDIG from June to August, or be dragged into the entire cycle after the midterm elections as Cipolaro warns. Over the next few months, trading platforms are focused on the CLARITY text and legislative timeline: it determines whether licensing requirements, asset classification, and matching structures trend toward "release after clarification" or "tightening restrictions," consequently shaping product lines and regional layouts. Institutional funds, on the other hand, are watching how Warsh’s statements will interact with congressional legislative progress in those initial post-appointment days: will it let the script of "new chair triggering corrections" continue to ferment, or reprice crypto assets after rules are established? For ordinary users, this summer is neither simply "Sell in May and go away" nor a reassuring space to leverage, but a transition period entwined with regulatory frameworks, monetary policy expectations, and the midterm election political cycle, with the industry's boundaries either tightening or being redrawn, which will be clarified in the June to August window.

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