Bitcoin Tumbles 5% to Near $76,000 as Tech Selloff Wipes Out Leveraged Longs

On Thursday morning, bitcoin tumbled roughly 5%, dropping from above $80,800 to around $76,000, according to Bitcoin Magazine Pro. The sharp decline in tech stocks rippled into digital assets, eliminating leveraged traders who had bet on continued increases.

This decline reversed the recovery that had pushed bitcoin above $80,000 during the night. Soon after the opening of U.S. equity markets, it reached a low around $76,100, the lowest point since early this week.

The turnaround was swift. Throughout Wednesday, bitcoin stayed close to $80,000, and by early Thursday traders had celebrated a short squeeze that lifted it beyond $80,500. Approximately two hours after the market opened, the price had fallen by over $4,000.

AI Deal on Wall Street Unravels

The trigger originated on Wall Street. The Nasdaq Composite dropped by up to 3.9% on Thursday and entered correction territory, trading 10% under the record closing level from last month, as reported by CNBC. The S&P 500 declined about 2%, wiping out the previous day's rally, which had been its strongest in three months.

Semiconductor and AI companies suffered the most. Nvidia and Broadcom both dropped roughly 5%, Tesla declined about 9%, and neocloud firms CoreWeave, Nebius, and IREN fell between 9% and 13%. Qualcomm slipped 9% following a disappointing outlook. Sandisk had lost almost 19% as of writing.

Investors are factoring in a Democratic-majority Congress following the Tuesday midterm elections. Traders are concerned about potential restrictions on data center expansion, and analysts at UBS estimated that roughly 30% of planned U.S. data center capacity additions for 2028 could face delays due to construction halts, according to Reuters. The selloff began in Asia, where South Korea's Kospi ended the day down over 5% as Samsung and SK hynix fell.

During the first hour of trading, U.S. equities lost $2.3 trillion in value, while the Russell 2000 dropped 2.5% and was heading for its largest single-day decline since June 5.

For most of the year, bitcoin's price has moved in step with the AI-focused technology segment, and bitcoin miners are now integrated into it. Many miners have sold their bitcoin holdings to finance AI data centers, meaning the same political uncertainty now affects both industries.

Leveraged Trades Unwind

Leverage amplified the move, turning it into a cascade. Approximately $370 million in leveraged crypto holdings were liquidated within roughly an hour as bitcoin fell through $77,000 and ether dropped below $2,300, with most being long positions. Broader estimates on social platform X place the figure for long liquidations near $400 million during that same 60-minute period.

The U.S. stock market lost over $1 trillion in value just minutes after opening, and the crypto market followed suit.

The short squeeze on Wednesday had drawn in late buyers using borrowed funds. When stock markets cracked, those leveraged positions were the first to be wiped out, and the ensuing forced sale drove bitcoin below the support level near $77,000.

Strong Jobs Data Dampens Rate-Cut Expectations

The broader economic picture provided little support. Initial unemployment claims dropped to 189,000 last week, tying the July figure, which was the lowest since 1969, according to Reuters. Economists had forecast 196,000.

Such a tight labor market provides the Federal Reserve with little incentive to loosen policy. This leaves risk-oriented assets dependent on growth narratives, such as AI, to support them, and that narrative is now facing political headwinds.

Capital movements offered only a modest counterbalance. On Wednesday, U.S. spot bitcoin ETFs attracted a net inflow of $74.6 million, ending a three-day streak of net withdrawals, with Fidelity's FBTC leading the inflows while BlackRock's IBIT experienced outflows.

Outlook for Bitcoin Price

The upcoming milestones include Friday's October employment data, the October consumer price index on November 10, and the Federal Reserve's decision on December 9. Political risk is also mounting, as House Democrats are preparing their own market structure legislation before they assume control of committees in January.

Market participants are monitoring whether bitcoin can maintain the $75,000 zone, which has provided support on election night and several occasions since August. A break below would bring the bitcoin price close to its lowest levels in months.

As of writing, the bitcoin price stands around $76,200.