US equities and digital asset markets sold off sharply in tandem on November 5, as investors reacted to the results of the US midterm elections, which saw Democrats win control of both chambers of Congress. The synchronized decline across stocks and cryptocurrencies triggered approximately $1.03 billion in crypto liquidations over 24 hours, according to data from CoinGlass.

The Nasdaq Composite fell 5.10% in intraday trading, while the S&P 500 dropped 3.43% and the Dow Jones Industrial Average declined 2.41%. The declines in major stock benchmarks unfolded in parallel with sharp drops in major digital assets, with Bitcoin down nearly 6% and Ether sliding more than 7%.

Traders are concerned that the newly elected congressional majority may tighten rules on the artificial intelligence industry. Beyond AI, Democrats also plan to investigate Trump family business dealings, including crypto-related ventures. With control of both chambers, the incoming majority will chair congressional committees and set hearing agendas, so how AI oversight and the planned probes into business dealings, including crypto-related ventures, advance in the new session will be a focal point for market participants tracking the policy backdrop.

Crypto Markets See Heavy Liquidations

During the selloff, Bitcoin fell 5.97% to $75,695.68, according to Binance market data, after touching a session low of $75,568. Ether dropped 7.29% to $2,247.74, having reached a low of $2,236.78. Both assets moved lower alongside equities, in a session where the two markets declined at the same time. Bitcoin's percentage loss was close in magnitude to the Nasdaq's intraday drop, consistent with the way digital assets have increasingly traded in tandem with risk-sensitive equities in recent years.

CoinGlass data shows that $879.92 million in crypto positions were liquidated over the past four hours. Long positions accounted for $818.90 million of that total, with short positions making up the remaining $61.02 million. Liquidations occur when an exchange forcibly closes a leveraged position because its margin can no longer cover potential losses, a mechanism that can add momentum to a selloff as falling prices trigger successive rounds of forced closures. The figures point to a sharp rise in forced selling concentrated within a matter of hours.

Over the past 24 hours, total liquidations reached $1.03 billion, with the wave of forced closures affecting 198,192 traders. The largest single liquidation during the selloff occurred on Binance's ETHUSDT pair, at $10.94 million — a figure that shows how widely the decline reached. Most of the forced closures came from traders holding bullish bets, and market participants watched the moves closely as volatility mounted.

Kobeissi Letter Points to Regulation Concerns

The Kobeissi Letter, a markets commentary service, shared its view on the selloff in a post on X. The firm asked what had fundamentally changed over the previous 24 hours, arguing that the midterm election results alone could not explain the decline, since markets had already priced in the outcome. The post read:

On today's stock market crash: As an investor, on days like today, you have to ask yourself one question: What fundamentally changed over the last 24 hours? The shift in the fundamental backdrop cannot be attributed solely to the Midterm Election results; markets had already…

— The Kobeissi Letter (@KobeissiLetter) November 5, 2026

According to the post, one likely catalyst behind the sudden shift is concern over a possible ban on AI or severe regulation of the sector. Democratic lawmakers have recently called for limits on advanced AI development, and some have gone further, calling for an outright ban on artificial superintelligence. The Kobeissi Letter said these calls may have contributed to the abrupt change in sentiment across markets.

That said, the firm does not expect an outright ban to materialize. It argued that enforcing such a ban would effectively mean the US surrendering its lead in AI to China. The Kobeissi Letter also pushed back on the idea that the decline means AI is over, calling the current moment part of the biggest technological revolution in human history.

Instead, the firm framed the plunge as a sudden shift in sentiment colliding with excessive leverage — a combination it said may have triggered forced liquidations by several major institutional investors. On that basis, the Kobeissi Letter characterized the downturn as more technical than fundamental, even as it acknowledged that regulation concerns remain legitimate. The firm described the session's price action as neither orderly nor rational, and advised investors to stay calm as the selloff unfolded.

This article is based on reporting from Blockonomi.