Wednesday's rally lasted about a day. Bitcoin climbed back above $81,000 on Wednesday as markets cheered the midterm results, and by Thursday afternoon it had given the whole move back, falling below $76,000 as a rout in artificial intelligence stocks swept through Wall Street and dragged crypto down with it. The speed of the reversal is the story here, because nothing about Bitcoin itself changed in 24 hours. What changed was the mood in the stock market, and crypto followed it down like it always does when fear takes over.

The AI Trade Broke First

Thursday's selling started in AI stocks, not in crypto. The Nasdaq sank nearly 6%, on track for its worst day since the tariff rollout in April 2025, while a chip-sector index plunged more than 10% in early trading, according to CoinDesk. Chipmaker Qualcomm fell about 10% in premarket trading after disappointing smartphone chip sales, and the selling spread from there. The worry, according to analysts at FalconX and GSR, is that the Democrats' midterm sweep could slow the buildout of the data centers powering the AI boom, because greater political opposition could slow new construction and energy approvals. Investors were already asking whether the vast sums being poured into AI infrastructure would ever pay off, and the election result gave them one more reason to doubt it. Bitcoin miners, many of which have been shifting their businesses toward AI computing, tumbled 15% to 20%, and crypto stocks were caught in the same downdraft, with Coinbase, Circle and BitGo falling between 10% and 15% while Strategy, the Bitcoin treasury company, lost 9.6%.

Leverage Did the Rest

Once prices started falling, leverage did what leverage always does and made a bad day worse. More than $1 billion in crypto derivatives positions were liquidated over the past 24 hours, according to CoinGlass, with most of the damage coming from traders betting prices would go up. The Block reported that about $880 million of that came in a single four-hour window, with nearly 211,000 traders caught in the wipeout, the largest since late October, when Bitcoin tumbled from nearly $82,000 to $76,000. Bitcoin fell about 6% to roughly $75,700, touching an intraday low near $75,500, its lowest since mid-September, while Ether dropped more than 7% to about $2,247 and Solana, XRP and Hyperliquid fell 6% to 7%. The losses came just a day after $378 million in short positions were liquidated in a single hour as Bitcoin pushed above $80,000, which means traders on both sides of the market have now been wiped out in the space of two days. That is what a market this leveraged looks like when it changes direction twice in 48 hours.

What Actually Changed

For all the drama, it is worth remembering what Wednesday actually was. The post-election rally was driven in large part by short-covering, traders closing bearish bets after a well-telegraphed result, according to Joshua Lim, global co-head of markets at FalconX. "We're seeing some fresh selling come back to the market as the implications on slower datacenter build out enter into focus," Lim said. Carlos Guzman, vice president of research at GSR, put it more bluntly: "The midterms appear to have triggered this sell-off, with investors worried that greater opposition to data-centre expansion could slow the AI buildout." The market has to live with two facts that pull in opposite directions, because the same election that calmed fears about the Iran conflict and sent oil prices lower also made the road harder for crypto legislation, with the CLARITY Act unlikely to pass under the incoming Democratic majorities. Bitcoin is back near its pre-rally levels, and traders are watching the $75,000 to $76,000 zone, where buyers stepped in before, to see if it holds a second time. Wintermute trader Jasper De Maere cautioned against reading too much into a single day, noting that crypto held up relatively well compared with AI stocks and that adoption keeps growing. "Let's see where we land in the short term here, medium term still glass half full," he said, adding that investors should keep an eye out for bargains.

So the rally lasted a day, the selloff lasted a day, and Bitcoin is roughly where it started the week. That is not a crash and it is not a comeback, it is a market that still takes its cues from stocks and still punishes anyone trading with too much leverage. The $1 billion in liquidations is the real lesson of the week, because it shows how fast a crowd can be wrong in both directions. Until Bitcoin can hold above $80,000 for more than a day, the honest read is that nothing has been decided yet, and the next move will probably come from Wall Street before it comes from crypto.

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Author: Cedric Holloway
New York Newsroom
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