Bitcoin erases post-election gains as Wall Street selloff triggers over $1 billion in crypto liquidations

Bitcoin, Ethereum, and other cryptocurrencies erased their post-election gains on Thursday as a sharp selloff in U.S. technology and AI stocks spilled into cryptocurrency markets, triggering more than $1 billion in leveraged position liquidations over the past 24 hours.

Bitcoin (BTC) fell 6% to $75,700, after touching an intraday low of $75,568, while ether (ETH) dropped more than 7% to $2,247. The declines reversed Wednesday's rally, when bitcoin climbed back above $80,000 following the U.S. midterm elections and signs that the Binance hack had not caused broader market disruption.

Midterm election results appeared to generate short-term optimism, but analysts say they haven't resolved macroeconomic uncertainties.

As of 2 p.m. ET, the Dow Jones Industrial Average and S&P 500 were down about 3% for the day, while the tech-heavy Nasdaq Composite had dropped 4.7%. The Cboe Volatility Index, or VIX, surged approximately 60%, reflecting heightened investor anxiety.

AI and bitcoin-related mining stocks were among the hardest hit, with Bitdeer and Keel Infrastructure each falling about 20%. American Bitcoin dropped 17% despite announcing a quarterly profit of $126 million. Crypto bellwethers Strategy and Coinbase were each down about 10%.

Of note, the Official Trump (TRUMP) memecoin hit an all-time low after falling more than 20% over the past two days.

The selloff also triggered a wave of forced liquidations across crypto derivatives markets. About $879.92 million in positions were liquidated over a four-hour period, including $818.90 million in longs and $61.02 million in shorts, according to CoinGlass. Total liquidations over the past 24 hours reached nearly $1.1 billion, affecting nearly 211,000 traders.

It should be noted that liquidation figures are typically based on publicly available data, which may significantly understate the extent of market liquidations.

Why bitcoin's post-election rally faded

The reversal suggests Wednesday's rebound may have been driven more by temporary optimism than a meaningful improvement in the market's underlying conditions, according to Wintermute.

The trading firm said the rally reflected a combination of relief following the Binance hack, enthusiasm surrounding the election results, optimism about a potential slowdown in AI spending and falling oil prices. However, those factors proved short-lived as broader macroeconomic pressures persisted.

"It's probably a combination of all of them in some way. What matters is that all of them seemed to be so short-lived that it actually didn't really matter," said Jasper De Maere, an OTC trader at Wintermute. "Trump is still the president for two years, the Middle East is still escalating, inflation is elevated into a strong U.S. economy."

What the midterms mean for crypto regulation

Beyond the immediate market pressures, the election results may also complicate the outlook for crypto regulation, potentially tempering some of the optimism that helped drive Wednesday's rebound.

Paul Howard, senior director at Wincent, said the Democrats' strengthened position in Congress could make bipartisan cooperation necessary for meaningful progress on crypto legislation over the next two years. With the Clarity Act's prospects uncertain, Howard expects the existing regulatory framework to largely remain intact until the next election cycle.

Ryan Kirkley, CEO of Global Settlement Network, said the election could delay crypto legislation but wouldn't fundamentally change longer-term institutional demand for digital assets.

"Investors are still focused on liquidity, interest rates and the broader economy, and those factors will continue to influence the market regardless of which party controls Congress," Kirkley said.

If the weakness continues, Wintermute identified $73,000 and $68,000 as the next levels to watch for bitcoin. The firm said it would need to see bitcoin convincingly reclaim and hold $80,000 before turning more positive.