Bitcoin returned to $76,000 on Friday after falling below that level during Thursday’s US trading session. The decline erased Wednesday’s post-election rebound as investors withdrew money from spot Bitcoin ETFs and a selloff in technology stocks hit risk appetite. The largest cryptocurrency is down more than 5.3 per cent in the last 24 hours but managed to recover the $76,000 level.

The trigger was neither a crypto-specific shock nor a regulatory action against digital assets. It was the realisation, spreading through equity and crypto trading desks simultaneously on Thursday morning, that the Democrats’ sweeping victory on Tuesday night carried a consequence the market had underpriced.

Between 5 and 6 November, Bitcoin fell 6 per cent, dropping below $76,000 after a stock market plunge triggered by a sell-off in technology shares amid concerns about the future of the AI industry. The market focused on the potential implications of the Democrats’ win for the AI industry. The new Congress could tighten oversight of AI development and data centre construction.

Bitcoin sold off alongside equities as the market realised that the Democratic sweep would lead to tighter AI regulation, fiscal restraint and a weaker growth outlook. The logic was direct: Democratic committee chairpersons would control the legislative agenda in both chambers from January, and the party’s progressive wing has pushed for meaningful oversight of AI infrastructure spending, data centre energy consumption and the semiconductor supply chains that underpin both AI and Bitcoin mining.

How Large Were The ETF Outflows And Who Was Selling?

US-listed spot Bitcoin ETFs saw $430.2 million in net outflows on Thursday, led by Fidelity’s FBTC at $199.9 million and BlackRock’s IBIT at $105 million, according to SoSoValue data. Those flows reversed Wednesday’s $74.6 million inflow, bringing net redemptions for the week through Thursday to $869.8 million.

The scale of the institutional exit, concentrated in the two largest and most closely watched ETF products, carried a signal beyond the headline figure.

Major US crypto ETFs have now seen a combined net outflow of more than $1.1 billion so far this week. Bitcoin’s correlation with technology stocks left it exposed to the selloff, with more than $1 billion in leveraged crypto positions liquidated in 24 hours as the market continued to decline.

Forced selling amplified the decline. In the last 24 hours, $1.26 billion in leveraged cryptocurrency positions were liquidated, $1.12 billion of which were long positions, or bets on higher prices, according to CoinGlass.

“The stock-market rout is spilling into crypto as asset managers liquidate alternative holdings to meet margin calls and deleverage portfolios,” Simon-Peter Massabni, head of business development at broker XS.com, said in emailed comments.

Was The Selloff Caused By The Democrats’ Win Or By Something Deeper?

The market’s immediate reaction to the Democratic sweep was not straightforward. Bitcoin initially fell to an intraday low of approximately $75,630 on the morning after election day before mounting a partial recovery above $78,000 as the week opened, a pattern consistent with what analysts described as a “sell the rumour, buy the news” dynamic.

Despite the prevailing bear sentiment, Fundstrat’s Tom Lee argued that even if Democrats take both chambers, they still cannot pass anti-AI or anti-crypto laws because the president holds a veto.

Two of Europe’s largest crypto ETP issuers analysed the situation and both reached a similar conclusion: the result was priced in, the recovery came from the end of uncertainty and from short covering, and the real question was whether genuine buyers would return.

The broader selloff reflected concerns about the outlook for AI spending, with investors questioning whether regulatory pressure could disrupt data centre expansion and semiconductor demand. Fed officials Beth Hammack and Thomas Barkin also signalled that further rate increases remain possible, adding another source of uncertainty for risk assets.

The earlier recovery had already shown signs of fragility. Bitcoin futures open interest remained broadly flat during Wednesday’s rebound, while Bitcoin traded at a discount on Coinbase relative to Binance, a sign of subdued US buying demand.

Does The Democrats’ Win Change The Regulatory Outlook For Bitcoin?

The question of what a Democratic Congress means for digital asset legislation is more complex than the initial sell-off suggested.

Political changes could complicate the adoption of digital asset legislation. Despite the price recovery, the new Congress could affect the regulatory landscape for digital assets.

The CLARITY Act, a bipartisan bill designed to provide a comprehensive regulatory framework for digital assets, distinguishing between commodities and securities, was expected to progress more slowly under Democratic committee leadership than it would have under Republican-chaired committees. However, the bill retains bipartisan support, and several Democratic senators have been vocal advocates for a workable regulatory regime for digital assets.

Bitcoin rebounded above $78,000 on Wednesday after Democrats won both chambers of Congress, despite three consecutive trading sessions of US spot ETF withdrawals. The contradiction, price rising even as institutional money continued to leave ETF products, reflects the complexity of the post-election environment. Short sellers were covering positions. Spot buyers at the lower levels were accumulating. The two forces cancelled each other on the price chart while the structural institutional question remained open. 

What Are Technical Analysts Watching?

Analysts offered a guarded but more bullish tone. Crypto analyst Michaël van de Poppe described the recovery as a possible “sell the rumour, buy the news” reaction. Ali Martinez pointed to the short-term holder realised price of $75,875 as a critical level, a daily close below that figure could revive ETF-driven downside. 

Bitcoin fell roughly 6 per cent to about $75,700 and ultimately closed at its lowest price in the past month on 5 November. A rare four-sigma stock market rout dragged Bitcoin down while every spot ETF issuer watched cash walk out the door. One small bounce has traders split on whether the worst is over, and a single price line may settle it.

The Crypto Fear and Greed Index fell to 34 on 4 November from about 70 a month earlier. Total crypto market capitalisation stood near $2.66 trillion, with Bitcoin dominance near 59 per cent.

What Would Sustain A Bitcoin Recovery From Here?

Beyond the AI outlook, market participants were watching the state of the US economy, inflation and the Federal Reserve’s next moves.

A breakthrough in Iran diplomacy would be positive for Bitcoin by improving the growth outlook and positive risk sentiment. An escalation, on the other hand, will likely trigger another selloff on increasing growth concerns and safe-haven flows. 

Bitcoin’s recovery requires returning capital, stronger ETF demand and enough buying to absorb overhead supply. US spot Bitcoin ETFs recorded net outflows of $398.6 million on 2 November. Elevated leverage and downside hedging remain risks.

Bitcoin climbed back above $80,000 on Wednesday. The election is over, the uncertainty is gone, and Bitcoin is still missing the one thing that matters most: buyers.

Whether those buyers return at scale, and whether the AI regulation concern that triggered Thursday’s rout proves durable or is absorbed into the market as the new political reality is priced in, will determine whether $75,630 marks the bottom of this cycle or merely a station on the way to a lower one.