Bitcoin erased Wednesday's post-election rebound on Thursday as a technology stock selloff spread to cryptocurrencies, wiping out hundreds of millions of dollars in leveraged positions. The leading cryptocurrency fell nearly 5% to about $76,500, back near levels seen before Wednesday's jump above $80,000, while roughly $428 million in crypto long positions were liquidated within a single hour.

Ethereum shed more than 5%, and other major tokens posted comparable losses, with roughly 90% of the top 100 cryptocurrencies trading in the red. The Nasdaq, meanwhile, approached correction territory as chipmakers and data-center firms fell on concerns over AI spending and Democratic oversight.

Wall Street offered no shelter. The S&P 500 lost about 2.6% in late-morning trading, while the Nasdaq sank nearly 4%, closing in on a correction — a 10% drop from its peak — per Reuters.

BTC Lows in November

The election is part of the answer, but anxiety over AI spending and interest rates is deepening the damage.

The election rally meets the AI selloff

Democrats' sweep of Congress initially rattled investors who expected tougher oversight of industries favored by President Donald Trump. Stocks rallied Wednesday as traders bet that gridlock would limit major policy changes and that falling oil prices would ease inflation. Bitwise Europe analyst André Dragosch told Decrypt the Democratic sweep was "largely priced in."

Thursday brought a different interpretation. Investors weighed what Democratic control might mean for the data-center boom, particularly in states where voters oppose rising electricity costs and new facilities.

The new political configuration is already moving things. Voters in at least 29 U.S. jurisdictions backed restrictions on data-center development, although not every measure is binding. UBS estimates that potential pauses could threaten 30% of planned U.S. data-center capacity additions in 2028, per Reuters.

"We suspect there is going to be some scrutiny on this aggressive AI buildout," Swissquote senior analyst Ipek Ozkardeskaya told Reuters.

Chipmakers and AI infrastructure companies took the hit first. The Philadelphia Semiconductor Index dropped about 8%, while CoreWeave and Nebius fell by double digits. Tesla tumbled roughly 9.5%, extending losses after Elon Musk spent heavily backing Republican candidates.

Investors were also questioning the returns on massive AI investments. The S&P 500 recorded its biggest bearish intraday move in months, dropping almost 4% in minutes.

"The market's moving from the promise of AI to the price of AI," Ted Parkhill, chief executive of Incline Investment Management, told Reuters.

The political shift also threatens crypto's ambitions in Washington. Democratic control complicates efforts to revive the stalled Clarity Act, a proposed federal rulebook for digital assets. The new Congress will not take office until January. Politics alone, however, cannot explain Bitcoin losing thousands of dollars in an hour.

Why Bitcoin's rebound fell apart

Wednesday's rally looked dramatic, but much of its buying pressure came from traders closing losing bets against Bitcoin. About $378 million in short positions were liquidated in one hour as Bitcoin pushed above $80,000, according to CoinGlass data — futures figures pointing to repositioning rather than a comparable influx of new buyers.

Thursday's reversal flipped the liquidation machinery in the opposite direction. Exchanges automatically close underfunded long positions as prices fall, generating additional selling and the enormous red candles visible on Bitcoin's hourly chart. Taken together, the two sessions wiped out roughly $800 million in leveraged positions — a gauge of how much borrowed money sits behind Bitcoin's election-week swings.

Crypto was already vulnerable before the election. The market had lost roughly $300 billion in value over the previous month amid concerns about AI spending, rising borrowing costs and the fallout from last week's multibillion-dollar Binance hack. Traders also expect another Federal Reserve rate increase in December as inflation persists. Friday's October jobs report could alter those bets; higher rates generally hurt demand for speculative investments.

Technically, Bitcoin's still-forming daily candle is threatening a bearish engulfing pattern that would swallow Wednesday's green body and erase the breakout in a single session. The hourly chart shows selling through $79,000 to near $76,100. The next test is $75,000, while reclaiming $80,000 could ease the pressure — though Thursday's candle has not yet closed, so the pattern remains unconfirmed.