Crypto Market Sudden Plunge Leads to Over $1 Billion Loss

The crypto market cap fell by more than 5% today, with a plunge led by Bitcoin and Ethereum. The massive decline, one of the biggest one-day drops for the sector in weeks, marks a complete turnaround from Wednesday’s positive price performance.

The entire market had risen the day before, spurred by Bitcoin’s climb above $80,000. However, the positive sentiment did not last as Bitcoin fell 5% in the last 24 hours to below $76,000.

With the massive decline, the entire crypto market cap dropped to $2.54 trillion, the lowest level since mid-August. Unsurprisingly, the recovering Crypto Fear & Greed Index, which had moved to Neutral, has now returned to Fear territory with 33/100.

Tech Selloff in Reaction to Midterms Results Triggered Crypto Market Crash

Today’s sharp decline in the crypto market is a reaction to the performance of tech stocks. The NASDAQ 100 declined by 6.4% amid an investor selloff over concerns about how Democrats could regulate AI.

With Democrats taking full control of Congress, many now expect AI regulations to become stricter. There are also concerns that the data center build-out happening in the US could face major obstacles.

Several candidates who campaigned on slowing down data center construction won their election to Congress and in gubernatorial races. Three Democrat candidates who promised a data center moratorium won governorships in Texas, Ohio, and Georgia, while Democrats also retained Pennsylvania.

These wins, which happened in areas where over 50% of US data center buildout is happening now, mean the planned AI infrastructure in those states could be paused. This would translate into lower demand for AI-related products.

Chip companies such as Nvidia and Micron fell 9% and 15%, respectively, while memory maker SanDisk declined 19%. SpaceX and Tesla also fell by 9% and 11%. Interestingly, tech giants such as Google, Microsoft, Meta and Amazon recorded declines of less than 4%. 

It was not only the NASDAQ 100 that slumped today; the rout also affected other indexes. The S&P 500 and Russel 2000 fell by 4%. Even the Dow 30 fell by 3%.

While the tech stock slump likely triggered the crypto market collapse, the sector was already struggling. The impact from the Binance hack remains, with demand contracting as investors withdrew $1 billion from spot Bitcoin exchange-traded funds (ETFs). 

Riot, the Bitcoin miner who is pivoting to AI compute hosting also announced it is selling 20,264 BTC.

Crypto Market Sees $1.1 billion in Liquidation as Bitcoin Fell to 7-Week Low

Meanwhile, today’s crash meant Bitcoin reached its lowest price in seven weeks. The flagship asset fell as low as $75,580, then recovered slightly, but it remains below $76,000.

Ethereum also fell by 7.5% to $2,250, while SOL is now below $90 after a 7% decline. Trump memecoin TRUMP was among the biggest losers in the top 100 crypto assets, down 12%.

Unsurprisingly, the biggest losers were crypto derivatives traders, who saw another $1 billion in liquidations today. Over $1 billion worth of positions were liquidated, according to Coinglass, with long traders mostly affected.

$954 million in long positions got liquidated, with only $127.1 million in short positions.  Bitcoin and Ethereum only accounted for around 45% of total liquidations, with other altcoin positions also severely impacted.