Author: Zhou, ChainCatcher
On November 5, US Eastern Time, US stocks suffered their largest single-day selloff since April 2025.
After the Democratic Party swept both chambers of Congress in the midterm elections, the market worried that AI data center construction would be slowed, chip stocks led the decline, and the Nasdaq Composite Index fell 5.52%, closing in a technical correction range.
On Friday, Asia-Pacific stock markets opened broadly lower, with South Korea's KOSPI triggering a circuit breaker during intraday trading.
The crypto market was also unable to stay on the sidelines. Bitcoin briefly fell below $76,000, Ethereum briefly fell below $2,250, and all post-midterm election gains were erased.
As of press time, according to CoinGlass data, liquidations across the network exceeded $1.2 billion in the past 24 hours, of which long positions accounted for nearly 90%.
Wall Street Turns from Bullish to Bearish, AI Selloff Spreads to Asia-Pacific
Just one day before the crash, Wall Street was still broadly bullish. After the election results were announced, the S&P 500 rose nearly 2% on Wednesday, and the Dow Jones rose more than 3%.
JPMorgan, Nomura, HSBC, Citadel Securities and other institutions successively released bullish reports, arguing that institutional positions had already been significantly reduced before the election, and that after uncertainty dissipated, there was ample room for funds to flow back.
Citadel Securities data also showed that retail investors had been net buyers of US stocks for 22 consecutive trading days, totaling nearly $33 billion.
Optimism lasted only one day. After the opening on Thursday, the market began to reassess the impact of the Democratic victory on the AI industry. The Democratic Party not only won both the Senate and the House, but also won gubernatorial elections in data center hubs such as Texas and Georgia. Texas's new governor, Gina Hinojosa, had advocated an immediate moratorium on new data center construction.
UBS estimates that about 30% of planned new US data center capacity for 2028 could be affected by potential construction moratoriums.
The selloff then spread from chip stocks. That day, the Philadelphia Semiconductor Index fell 12.25%, which according to Reuters statistics was the index's second-largest single-day decline on record. Nvidia fell more than 9%, while Micron and AMD both fell about 17%.
By the close, the Dow fell 3.44%, the S&P 500 fell 4.36%, and the Nasdaq 100 fell 6.36%. The US stock market lost about $3 trillion in market value in a single day.
Nomura cross-asset strategist Charlie McElligott described it as the market abandoning the leading stocks that had led gains this year, with hedge funds eager to lock in profits before the end of the year. Retail investors also changed their habit of buying the dip. Vanda Research data showed that retail investors' net sales of individual stocks that day were the largest since March 2020. Viraj Patel, the firm's global macro strategist, viewed this as a full capitulation by retail investors.
On Friday, Asia-Pacific stock markets continued their decline. The Korea Exchange triggered a circuit breaker at 9:03 a.m. local time, suspending trading for 20 minutes. The KOSPI fell as much as 8.8% intraday, falling below 5,000 points for the first time in nine months. Samsung Electronics and SK Hynix briefly plunged more than 10%. The Nikkei 225 fell more than 6% intraday, and Taiwan stocks also briefly fell more than 8%.
Bitcoin Falls Below $76,000, Leveraged Funds Hit by Both Longs and Shorts
The crypto market's trajectory was almost in sync with US stocks. After the election results became clear on Wednesday, Bitcoin briefly surged above $80,000, and short positions were hit by concentrated liquidations.
The situation reversed completely on Thursday. According to CoinGecko data, when the Nasdaq fell nearly 4% intraday, Bitcoin dropped from $78,767 to $75,986 within an hour. Bitcoin then briefly fell below $76,000, hitting a new low since mid-September and falling below its 50-week moving average. Ethereum also declined in tandem, briefly falling below $2,250.
For the full day on Thursday, Bitcoin fell about 6%, comparable to the 5.52% decline in the Nasdaq Composite Index and the 6.36% decline in the Nasdaq 100 Index, and significantly smaller than the 12.25% decline in the Philadelphia Semiconductor Index.
CryptoQuant analyst Darkfost previously noted that, calculated on a 90-day rolling window, Bitcoin's correlation with the S&P 500 was already higher than the historical average.
In terms of spot ETFs, SoSoValue data showed that US spot Bitcoin ETFs saw net outflows of $430 million on November 5, with none of the 12 ETFs recording net inflows. Total net asset value fell from $102.26 billion the previous day to $96.65 billion, dropping below $100 billion.
In fact, this round of capital withdrawal had already begun before the election. In the five trading days since October 30, spot Bitcoin ETFs recorded net inflows only on November 4, with total net outflows of about $1.51 billion. The situation for spot Ethereum ETFs was even weaker, with net outflows of $99.97 million on November 5, and only 3 days of net inflows out of 16 trading days from October 15 to the present.
In the derivatives market, in contrast to Wednesday, this time it was the longs that were liquidated. CoinGlass data showed that liquidations across the network totaled $1.251 billion in the past 24 hours, of which long positions accounted for $1.108 billion, or 88.6%, with a total of 239,896 people liquidated.
In addition, the US stock selloff was also transmitted directly to the crypto derivatives market through stock perpetual contracts. CoinGlass's liquidation heatmap showed that liquidations of SNDK- and SOXL-related contracts reached $58.32 million and $56.71 million, respectively, both exceeding SOL's $43.25 million.
Market sentiment subsequently cooled. CoinGlass's Fear and Greed Index fell to 27 on Friday, down 24 points from the previous day, putting it in the fear zone, while the average over the past 30 days was still 50.
Crypto-Related Stocks Broadly Plunge, Mining Companies Hit Hardest
The decline in coin prices also dragged down crypto-related stocks listed in the US. Among trading platforms and compliance-related companies, Coinbase fell 9.69%, Robinhood fell 10.32%, and Circle fell 8.72%.
Digital asset treasury companies generally fell more than the assets they hold. Ethereum treasury companies Bitmine and SharpLink fell 12.56% and 10.21% respectively, while Bitcoin treasury companies Strategy and Strive fell 9.29% and 10.17% respectively, with declines larger than those of Ethereum and Bitcoin over the same period.
The steepest declines were among Bitcoin miners that have pivoted to AI data centers over the past two years.
These miners hold power resources and sites, and have been converting their mining facilities into AI computing centers, with valuations rising along with the AI infrastructure boom. SemiAnalysis estimates that Texas accounts for about 30% of the U.S. data center capacity planned to come online in 2028, far higher than other states.
The miners' declines began as early as Wednesday, when Core Scientific fell 11.6%, IREN fell 12.5%, and Cipher Digital fell 21%.
Bernstein subsequently cut its price targets for seven miners, citing tightening financing and an uncertain outlook for Texas, including IREN from $100 to $55 and TeraWulf from $36 to $20. The firm noted that among the companies it covers, IREN, Riot and Cipher have the largest exposure to Texas.
U.S. stocks plunged on Thursday, and miners' declines widened further. Bitdeer closed down 18.68%, IREN fell 16.95%, CleanSpark fell 16.47%, Cipher fell 14.62%, MARA fell 14.48%, and TeraWulf fell 13.85%.
The market awaits Anthropic's IPO and Nvidia's earnings
Over the next two weeks, tech stocks will face two key milestones.
The first is Anthropic's listing process. Just one day before the plunge, HSBC chief multi-asset strategist Max Kettner still regarded the Anthropic IPO as the real clearing event for tech stocks, believing that once it was completed smoothly, one could go fully long on tech stocks. Now this event itself has become uncertain.
According to Reuters, four people familiar with the matter said potential investors doubt whether Anthropic can launch its roadshow in the week of November 9 and list within November as planned, and that Anthropic may delay its listing if AI-related assets remain under pressure. Investors are also waiting for the company's October revenue data, which remains blank in the updated S-1 filing.
Valuation expectations are also being lowered. The Wall Street Journal reported that three major investors planning to subscribe believe that after the selloff, it will be difficult for the company to reach the previously expected $1.5 trillion valuation, with one believing it may be closer to $1 trillion. Just over a month ago, the valuation being discussed in the market was still around $2 trillion.
The other milestone is Nvidia's third-quarter earnings, to be released after the U.S. market close on November 17, and market expectations for this report are not low. Nvidia's guidance in August was revenue of about $108 billion for the quarter, up about 106% year over year, while analysts' consensus expectation is about $109 billion. This guidance did not include data center computing revenue from the Chinese market.
More closely watched than the performance figures is management's commentary on the demand outlook. Nvidia has already warned in its quarterly risk disclosures that power shortages, financing constraints and regulatory obstacles to data center construction could delay customers' deployment schedules and weigh on revenue growth. After the Democratic victory, these risks are precisely the focus of investors' reassessment.
As the most core company in the AI infrastructure chain, Nvidia's commentary will directly affect the market's judgment on the pace of data center construction, and miners pivoting to AI are also on this chain.
From U.S. stocks to Asia-Pacific and then to the crypto market, the main thread of this round of decline has always been the AI trade. JPMorgan strategist Nikolaos Panigirtzoglou previously warned that after October's selloff, hedge funds may need several weeks of market stabilization before rebuilding AI exposure. Hennion & Walsh chief investment officer Kevin Mahn also believes there will be more volatility in the market ahead.
Anthropic's IPO roadshow and Nvidia's earnings will both be revealed within the next two weeks. Their results will not only matter for tech stocks, but will also determine whether this round of correlated declines, which has spread from U.S. stocks to Asia-Pacific chip stocks and crypto assets, can find a foothold.
Crypto critic Warren may helm Senate Banking Committee, crypto legislation stalls again
On the policy and regulatory front, the Democratic victory may also have a significant impact on the crypto industry.
Although crypto-friendly House Financial Services Committee Chairman French Hill won re-election, with the Democrats taking the House, he will hand over the chairmanship in January next year. According to Reuters, the committee's senior Democratic lawmaker Maxine Waters is the main candidate to succeed him.
In the Senate, Elizabeth Warren, who has long been critical of the crypto industry, is expected to head the Banking Committee. She previously co-signed a letter to the Justice Department and the Treasury Department demanding an explanation of the investigation into the Trump family's crypto business.
Democrats have also consistently insisted on adding ethics provisions to the CLARITY Act to restrict conflicts of interest among government officials, and according to Bloomberg, it is precisely this disagreement that has stalled the bill. In September this year, the CLARITY Act failed to advance in a Senate procedural vote by 49 votes to 50.
Warren's stance on new crypto-related products is equally tough. On November 3, the CFTC announced that it would allow single-stock perpetual contracts to be listed and traded on its registered exchanges, and Warren immediately issued a statement arguing that such high-risk products are prone to insider trading and could bring severe volatility to the market.
Several institutions believe crypto legislation will be further delayed. Stifel chief Washington policy strategist Brian Gardner believes the CLARITY Act has no chance of advancing during the remainder of this Congress, and the probability of a bipartisan compromise in the next Congress is also very low; he also expects Warren to launch investigations into crypto companies. Compass Point analyst Ed Groshans pointed out that after Warren takes charge of the Banking Committee, the adoption of crypto assets will mainly depend on regulatory actions by the SEC and CFTC.
