"When the public has higher expectations of the DPP, the party has to pay a price for failing their expectations," Hawang said.
With the KMT's solid victory, analysts foresee a legislature dominated by one big party and backed by big-money donors. As it is hard for smaller parties to put bigger parties in check, the future of partisan politics looks dismal, they said.
"The KMT will be like a dinosaur and the DPP a tiger, with fiercer and uglier fights continuing between the two rival parties," Chao said.
Apart from the legislative elections, the DPP-initiated referendum to reclaim the KMT's stolen assets also failed. Analysts were divided on the impact the failed referendum would have on the party.
Hawang said that that the defeat was a significant blow to the DPP, which seems to have exhausted all possible means to achieve its goal of retrieving the stolen assets.
As a minority in the legislature, Hawang said the DPP would continue to face a KMT boycott on any attempt to recover the assets.
The DPP will still face the same dilemma even if its presidential candidate, Frank Hsieh (
Wu dismissed the result of the referendum as insignificant because it was part of the election campaign strategy and the topic was a "non-issue."
Legislation is required to legally reclaim the KMT's improperly acquired assets, Wu said, and it is highly unlikely the DPP would be able to enact a law in a KMT-dominated legislature.
Wu, however, admitted that a successful referendum could have boosted the momentum for another referendum initiated by the DPP on applying to join the UN using the name Taiwan that will be held concurrently with the presidential election.
Chao said the March referendum would bear more significance and is the decisive battle.
With less than 70 days left before the presidential election, analysts said the DPP may adjust its campaign strategy to pull off a better showing in March.
Wu said Hsieh would play a more dominant role in mapping out the party's campaign strategy in the run-up to the March poll.
Chao agreed, saying that Chen, who resigned last night as DPP chairman, would be under tremendous pressure and would have to let Hsieh play a more decisive role in the race.
Chao said he did not think Chen need to to bear responsibility for the legislative defeat, but said Hsieh could face severe criticism from party members for distancing himself from the legislative polls.
The DPP would face a tougher battle ahead if the party were split and Hsieh lost the backing of his party members, Chao said.
As the presidential election looms, it is now up to voters to decide whether they want to see the country ruled by a single party holding both the executive and legislative reins, or a split government where the administration is constantly at odds with the legislature.