Election High Fades Fast: $BTC Takes the Scenic Route to Liquidation Limbo

Bitcoin ($BTC) surged 2% on November 5 to $79,676 after the Democratic Party won the midterm elections, briefly reclaiming the $80,000 level as appetite for risk assets returned. The rally did not hold: $BTC fell below $76,000 on Thursday, reached $75,463 — its lowest level since Sept. 16 — and dropped as much as 6% to a seven-week low. Arthur Hayes also flagged major downside risk for the asset.

The reversal followed a technology-stock selloff that spilled into crypto. Bitcoin fell to about $76,500, down nearly 5%, while Ethereum shed more than 5% and roughly 90% of the top 100 cryptocurrencies traded lower. Approximately $428 million in crypto longs were liquidated in one hour, compared with about $378 million in short positions liquidated during Wednesday’s move above $80,000. Bitcoin briefly dropped below its 50-week simple moving average at $75,733.

Wall Street losses accelerated the risk-off move. The S&P 500 lost about 2.6% in late-morning trading and later recorded its biggest bearish intraday movement in months, falling almost 4% in minutes, while the Nasdaq sank nearly 4% and then dropped 4.2%. The Philadelphia Semiconductor Index fell about 8%, CoreWeave and Nebius declined by double digits, and Tesla tumbled roughly 9.5%.

Democratic control of Congress initially prompted concern about stricter oversight of industries favored by President Donald Trump before traders reassessed the implications for data-center expansion and AI infrastructure. Voters in at least 29 U.S. jurisdictions backed restrictions on data-center development, although not every measure was binding. UBS estimates potential pauses could threaten 30% of planned U.S. data-center capacity additions in 2028. Bitwise Europe analyst André Dragosch said the Democratic sweep was “largely priced in,” while Swissquote senior analyst Ipek Ozkardeskaya told Reuters, “We suspect there is going to be some scrutiny on this aggressive AI buildout.” Incline Investment Management chief executive Ted Parkhill told Reuters, “The market’s moving from the promise of AI to the price of AI.” Democratic control also complicates efforts to revive the stalled Clarity Act, a proposed federal rulebook for digital assets; the new Congress will not take office until January.