Bitcoin Reverses Election Gains Amid AI Stock Plunge

Bitcoin Erases Election Rally as AI Stocks Crater

The market’s initial enthusiasm for a Democratic Congress, which propelled stocks to their best day in three months and pushed Bitcoin above $80,800 on Wednesday, evaporated Thursday. The subsequent reversal saw major indices plummet, with the S&P 500 experiencing its worst session since April 2025, dropping 4.36%. The Nasdaq fell 5.52% to enter correction territory, more than 10% below its recent record high, while the Dow Jones Industrial Average shed 1,833 points.

Tech Sector Hit Hardest

The downturn was particularly acute in the technology sector, especially among semiconductor and AI-related stocks. The iShares Semiconductor ETF recorded its worst day since March 2020, falling over 12%. Major players like Micron saw a 17.5% decline, AMD dropped 17.3%, Marvell lost 16.4%, and Nvidia fell 9.3%. The collective market value of the “Magnificent Seven” tech giants evaporated by approximately $1 trillion. The VIX, a measure of market volatility, surged to an intraday high of 28.09, its highest point since March. By the close of trading, the U.S. stock market had lost a staggering $3 trillion in value, a figure exceeding the entire market capitalization of the cryptocurrency market.

Election Outcome Fuels AI Scrutiny

The same election results that buoyed markets on Wednesday were identified as the catalyst for Thursday’s sell-off. Investors appeared to be factoring in potential headwinds for the artificial intelligence sector, stemming from local opposition to data center construction in states where Democrats secured victories. This led to expectations of slower permitting processes and increased regulatory oversight for AI infrastructure development. Ipek Ozkardeskaya, a market analyst at Swissquote, commented, “We suspect there is going to be some scrutiny on this aggressive AI buildout.” Concurrently, expectations for a December interest rate hike by the Federal Reserve decreased, with the probability falling to 70.1% from 82.7%.

Crypto Markets Follow Suit

The cryptocurrency market was not immune to the broader market turmoil. Bitcoin declined by 5.4% to $75,871, falling below its pre-election trading level. Ethereum saw a steeper drop of 7.6% to $2,239, underperforming the Nasdaq. XRP lost 9.8%, and Hyperliquid fell 4.9%. The CMC20 index, a broad measure of the crypto market, decreased by 6.29%. The day saw approximately $1.1 billion in long cryptocurrency positions liquidated, though a slight recovery occurred overnight.

Privacy Coins Show Resilience

In contrast to the broader market, two privacy-focused cryptocurrencies demonstrated resilience. Zcash fell by a modest 0.8%, and Monero dropped 2.2%, both outperforming the general market. Both assets remain up for the week. Over the past year, Zcash has surged 146% and Monero 74%, while Bitcoin has declined 26% and Ethereum 34%. This performance suggests continued investor interest in privacy-centric digital assets.

Jobs Report Looms

Attention now turns to Friday’s October jobs report. Following a week where the market interpreted the same political outcome in diametrically opposed ways within two trading sessions, the extent of current market understanding remains uncertain. The upcoming economic data is expected to provide further direction.