Bitcoin (BTC) plunged in the evening of November 5 Japan time from around $80,800 to as low as $75,642 at one point, wiping out in a single day the gains that had built up after the U.S. midterm elections. Artificial intelligence (AI)-related stocks in the U.S. were sold off across the board, and the wave spilled over into the digital asset market.
The trigger was the Democratic Party's capture of control of both the House and Senate in the midterm elections. Concerns about tighter regulation of the AI industry and delays in data center construction spread rapidly among investors. The Democratic Party also plans to investigate business dealings of President Trump's family, including crypto-related ventures, adding to uncertainty over the regulatory environment.
In the U.S. stock market during the same period, selling accelerated, centered on semiconductor shares, compounded by Qualcomm's weak earnings outlook. The Philadelphia Semiconductor Index fell as much as 10% at one point. The Nasdaq Composite dropped 5.10%, the S&P 500 fell 3.43%, and the Dow Jones Industrial Average declined 2.41%, with the Nasdaq sinking more than 10% below last month's record high.
Selling also spread to crypto-related stocks. Mining companies pivoting to AI computing businesses — Keel Infrastructure and Bitdeer — fell about 20%, while Coinbase (COIN), the largest U.S. crypto exchange, and Strategy (MSTR), which holds a large Bitcoin position, each fell about 10%.
Note: Changes are as of the time of reporting. Bitcoin's move reflects the decline from around $80,800 to $75,642.
According to Coinglass, forced liquidations over 24 hours in this selloff reached $1.03 billion — the largest since late October — affecting 198,192 investors. Most of the liquidations came from bullish positions betting on gains, and the unwinding of leveraged trades amplified the decline.
Joshua Lim of FalconX, an institutional crypto brokerage, said fresh selling is emerging as delays in data center construction come into focus. He also noted that the post-election rally had been driven by short covering that had priced in the expected outcome.
Carlos Guzman, vice president of research at digital asset trading firm GSR, said doubts about the profitability of the massive capital being poured into AI infrastructure had been simmering for some time, and the election results added a new source of concern. Lackluster semiconductor earnings also intensified the pressure, he said.
Looking ahead, major crypto market maker Wintermute cited $73,000 and $68,000 as downside support levels if the decline continues, and said it would not turn bullish until Bitcoin clearly recovers and holds $80,000. Meanwhile, Jasper De Maere, a trader on the firm's relative trading desk, said crypto has held up relatively well amid the AI stock rout and that the medium-term outlook is positive given growing adoption.
Investment bank Bernstein cut its price targets for seven crypto mining companies moving into AI data center businesses by as much as 54%, citing uncertainty surrounding Texas. In Texas, the Democratic Party will also hold the governor's seat, making the direction of state policy — which has centered on attracting data centers — harder to read.
Market participants are voicing concern that AI-related stocks and crypto are increasingly moving in tandem. As mining companies transform their business structures toward AI computing, Bitcoin is taking on risk characteristics similar to technology stocks. De Maere said correlations between assets remain high and that investors should pay attention to undervalued opportunities that surface over time.
In the near term, whether Bitcoin can recover $80,000 will be the focal point for gauging market direction. Even after the supply-demand deterioration from forced liquidations runs its course, as long as political uncertainty over AI regulation and data center construction persists, the market may continue to struggle for upside.
