Bitcoin has given back all of its post-election gains.
The price fell about 5% on Thursday, 5 November, to around $76,500, after climbing back above $80,000 on Wednesday following the US midterm elections. Ether also fell more than 5%, and about 90% of the top 100 cryptocurrencies were down on the day.
About $428 million in leveraged long positions, bets on rising prices, were liquidated within an hour as the price dropped, according to market data. On Wednesday, the move above $80,000 had wiped out about $378 million in short positions, according to CoinGlass.
Wall Street reverses
The sell-off followed a sharp fall on Wall Street, a day after US stocks hit record highs.
The S&P 500 fell as much as 3.8% on Thursday, and by about 11am New York time was down 3.2%. The Nasdaq Composite was down nearly 5%, putting it close to correction territory. Chipmaker Nvidia fell more than 6%, and the wider semiconductor index dropped by as much as 11%.
The fall reversed Wednesday’s rally, when the S&P 500 gained 1.6%, its best day in three months, and the Dow Jones Industrial Average rose more than 1,500 points. President Donald Trump had posted on Truth Social that the “Stock Market just hit another Record High.”
The S&P 500 had not hit its first circuit breaker at the time of writing. That would be triggered by a 7% fall, to 7,150.41 points, before 3:25pm New York time, and would pause US stock trading for 15 minutes.
Why markets fell
Investors are weighing what Democratic control of Congress could mean for the tech sector, in particular the boom in data centres. Voters in at least 29 US areas backed limits on data centre construction this week, though not all of the measures are binding. Bank UBS estimates that pauses could threaten 30% of the US data centre capacity planned for 2028, Reuters reported.
“We suspect there is going to be some scrutiny on this aggressive AI buildout,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, told Reuters.
Investors are also worried about stubborn inflation, and traders expect the Federal Reserve to raise interest rates again in December.
The crypto market has lost about $300 billion in value over the past month, hit by tech sector worries, rising borrowing costs and last week’s Binance hack.
What happens next
Friday’s US jobs report for October is the next big test, as it could change expectations for a December rate rise. On the charts, traders are watching $75,000 as the next support level for Bitcoin, with a move back above $80,000 needed to ease the pressure.
