Ray Dalio warns: As the 2026 US midterm elections approach, Trump's policy momentum faces pressure

Bridgewater (Bridgewater) founder Ray Dalio points out that the US political power structure has historically followed a “biennial flip” pattern. As inflation and living costs escalate, the 2026 midterm elections could lead to a significant shift in Congress, further weakening the Trump administration’s policy push and potentially impacting the current regulatory easing process that the crypto industry relies on.

Rising inflation and living costs may shift political sentiment

Dalio states that, based on historical experience, US political power tends to fluctuate noticeably every two years. This is because the ruling party often “makes too many promises during campaigns, but finds it difficult to fully deliver once in office.”

He highlights that the issue of “affordability” is likely to become the most critical political topic in 2026, which could be unfavorable for the Republicans. He predicts that the Republicans may lose control of the House of Representatives, leading to political chaos in 2027 and setting the stage for a highly uncertain political landscape ahead of the 2028 presidential election.

Limited two-year window, midterm elections may weaken Trump’s governing space

Dalio further explains that the design of the US democratic system means that presidents typically have only the first two years to push major policies effectively.

He openly states that President Trump currently has a “two-year unimpeded governance window,” which is likely to narrow significantly after the 2026 midterm elections, and could be completely overturned after the 2028 election. He also notes that in recent years, long-term single-party control has become quite rare.

Republican House seats only about 5 seats, high risk of flipping

Currently, the Republicans hold a narrow majority of about five seats in the House of Representatives, making the political structure quite fragile. Market prediction data also indicates a considerable probability of Democrats regaining control of the House. According to Polymarket betting results, the chance of Democrats retaking the House in the November elections is approximately 79%.

Policy benefits boost industry development, but political variables also increase

Since Trump’s election, cryptocurrency industry players have become one of the key beneficiaries of the Trump administration’s tech-oriented policies. The policies implemented have focused on digital technology and AI development, indirectly leading to a noticeable shift in US crypto regulation towards a more friendly legislative and policy environment.

However, such policy benefits heavily depend on the stability of the congressional power structure. If the balance of power shifts after the 2026 midterm elections, the regulatory approach that favors the crypto industry could face reversal or interruption before key legislation is enacted.

Legislative timelines influenced by elections, legislative momentum may quickly cool

Among various bills, the most closely watched is the “CLARITY Market Structure Act,” which exemplifies how political calculations are surfacing early.

According to analysis by investment bank TD Cowen, some Democratic lawmakers anticipate a potential power shift in the 2026 midterm elections. As a result, they are deliberately delaying related votes, waiting until after the election to re-strategize. This means the bill might not see progress until 2027 at the earliest.

As early as 2024, Joe Doll, Chief Legal Officer of NFT trading platform Magic Eden, pointed out that under the current political structure, the Trump administration and pro-crypto legislators have limited time—about two years—to effectively advance policies. With the House seats already very close, if Congress becomes divided, related policies and legislation could stall or even completely freeze, with future developments still uncertain.

This article, Ray Dalio warns: The 2026 US midterm elections are imminent, and Trump’s policy momentum faces pressure, was first published on Chain News ABMedia.