Bitcoin Slides Below $76,000 as Post-Election Stock Rally Fades
Bitcoin fell below $76,000 as investors pulled back from riskier assets, erasing a post-midterm rebound. Crypto stocks and the wider crypto market also dropped sharply.
Bitcoin tumbled below $76,000 on Thursday as investors moved out of riskier assets amid a broad sell-off in US stocks. The move reversed a sharp rebound on Wednesday, when the cryptocurrency had climbed above $80,000 after midterm election results showed Democrats sweeping both chambers of Congress, according to Yahoo Finance.
Bitcoin fell 5% on Thursday, according to the Yahoo Finance report. Coinbase Global, Robinhood, Strategy and Bullish, all listed crypto-related stocks, fell 9% or more. Data from CoinMarketCap cited in the same report showed the global market value of crypto assets dropped 5%, a loss of about $370 billion over the same period.
Fragile market after a major exchange hack
The sell-off added to signs of fragility in the crypto market. Last week, a $6.3 billion hack of Binance, the world's largest cryptocurrency exchange, rattled prices. Bloomberg reported that the selloff had begun to ease as investors looked for a cautious recovery.
CoinDesk reported that bitcoin got back to the $76,000 level even as exchange-traded funds shed $430 million following a tech-led market rout. Earlier this week, research firm K33 had warned that unusually thin trading and rising use of leverage could leave bitcoin prone to sharp price swings after the midterms.
Outlook for crypto policy in Washington
The Democratic takeover of Congress has raised new questions about the industry's legislative path. Brian Gardner, chief Washington policy strategist at Stifel, said on Thursday that the long-stalled Clarity Act is unlikely to advance before the end of the year. He said the odds of a bipartisan compromise in the next Congress were "pretty low."
Gardner also expects Senator Elizabeth Warren, who is poised to chair the Senate Banking Committee, to pursue investigations of crypto firms, Wall Street banks and private equity firms.
Not every analyst sees the election outcome as negative for bitcoin. Sean Farrell, head of digital assets at Fundstrat, argued in a note to clients that a decisive Democratic win could strengthen bitcoin's appeal as a hedge against larger federal deficits.
What we know so far
Bitcoin remains volatile after its post-election swing, and the direction of the wider market will depend on US equities and the outlook for crypto legislation. The Clarity Act's prospects remain uncertain, and analysts are divided on whether the midterm result will support or weigh on the cryptocurrency over the coming months.
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