The American equity market experienced its most brutal trading session since the tariff announcements made by President Trump during Liberation Day in April 2025.
The Nasdaq tumbled 5.5%, the S&P 500 dropped 4.3%, and the Dow Jones Industrial Average slid 3.4%.
Ongoing declines within the artificial intelligence sector pulled the broader markets downward. The Nasdaq 100, which features an even heavier concentration of technology equities than the main Nasdaq index, slumped 6.4%, marking its worst single-day performance since the pandemic-driven panic of March 2020.
Additionally, the Philadelphia Semiconductor Index crashed 12% on Thursday, also recording its steepest daily decline since March 2020.
Bitcoin retreated 5.2% across a 24-hour window, trading just under the $76,000 threshold. Ether dropped 7.5%, while both XRP and Solana each fell by 5.5%.
Gold performed in the exact manner that digital asset advocates have historically anticipated, advancing while risk-oriented assets sank. Although the precious metal pulled back from its earlier peaks, it still managed a 0.6% gain, resting at $4,094 per ounce.
This steep correction unfolded as market participants kept analyzing the aftermath of Tuesday’s U.S. midterm elections, which resulted in the Democratic Party seizing control of both congressional chambers. The primary concern is that heightened political friction could impede the development of data centers required to sustain the artificial intelligence boom, a sector that has grown increasingly crucial for cryptocurrency miners.
Joshua Lim, who serves as the global co-head of markets at institutional crypto prime broker FalconX, stated that fresh selling pressure is returning as the market absorbs the potential consequences of a decelerated data center expansion.
He added that the post-election relief rally observed yesterday was largely fueled by short-covering against the backdrop of a widely anticipated outcome.
Carlos Guzman, the vice president of research at digital asset trading firm GSR, mentioned that investors were already questioning the actual yields generated from the massive capital investments directed into AI infrastructure. The electoral outcome simply introduced another layer of anxiety, he explained.
According to Guzman, the midterms appear to have served as the catalyst for this liquidation wave, with market participants nervous that heightened resistance against data center growth could stall the broader AI buildout, compounding existing worries surrounding artificial intelligence capital expenditures.
He pointed out that discouraging financial reports from major semiconductor manufacturers further intensified the market strain.
Crypto losses relatively muted amid leverage flush
Despite the broader turmoil, major cryptocurrencies managed to weather the storm somewhat better than numerous equities directly linked to the artificial intelligence trade.
Bitcoin was down roughly 5.5% over the trailing 24 hours, slipping back close to the valuations recorded prior to Wednesday’s upward surge.
This sudden market reversal arrived alongside a wave of forced liquidations within derivatives exchanges, where speculators had heavily accumulated leveraged long positions anticipating higher prices.
According to data from CoinGlass, upwards of $1 billion worth of crypto derivatives contracts were liquidated within a 24-hour span, with the vast majority coming from bullish wagers. This represents the most substantial market flush since at least October 28 through 29, when Bitcoin plummeted from nearly $82,000 down to $76,000.
Guzman noted that yesterday’s relief rally seemed fueled by optimism surrounding geopolitical stability following the midterm outcomes, but today that sentiment reversed completely as risk appetite contracted further under the weight of excessive leverage.
Jasper De Maere from Wintermute warned against drawing sweeping conclusions from a single day of panic selling.
He highlighted that the digital asset class has exhibited notable resilience during the chaos affecting AI-related stocks, while steady mainstream adoption continues to reinforce the long-term outlook.
De Maere suggested watching how short-term conditions stabilize, noting that the medium-term perspective remains optimistic. He also advised investors to keep a close watch for attractive buying opportunities emerging over time, especially given the current high correlation across various asset classes.
Originally published at https://www.coindesk.com/markets/2026/11/05/bitcoin-crypto-stocks-caught-in-ai-trade-meltdown-but-wintermute-trader-sees-glass-half-full.
