Bitcoin Tumbles 5% Amid Broader Market Plunge — 2nd Update

By Dean Seal and Joseph WilkinsBitcoin sank below the $76,000 level in conjunction with a rout in the stock market, led by tech losses as investors reevaluated this year's popular AI trade.The flagship cryptocurrency gave back post-Election Day gains to trade 5.5% lower at $75,940. Bitcoin had just enjoyed its best day in weeks on Wednesday, rallying alongside U.S. stocks as oil prices tumbled and investors cheered a historic Democratic sweep of Congress.Investors reversed course on Thursday and started positioning for a slowdown in the build-out of data centers. Big Tech took a beating in the midterms, with voters across the Midwest and South passing bans on data center construction.The voter revolt pushed the tech-heavy Nasdaq down 5% into correction territory. Crypto prices, which tend to track with the movement of tech stocks, followed closely behind.Crypto also had a rough time at the polls this week. Democrats securing control of both chambers of Congress is due to make for a more challenging legislative environment, crypto analysts said."The change raises the prospect of stronger congressional oversight and scrutiny of industry practices, particularly if critics gain key committee chairs," Bitget Wallet researcher Lacie Zhang said.Over the longer term, the industry will have to adjust to a Democrat-majority congress, though it is worth noting that bitcoin is now far more embedded in the traditional financial system than in past cycles, Glassnode analysts said. Banks, asset managers and exchange-traded funds are invested, making a change in Washington less of a threat than it would have been a few years ago, they added.Long-term allocators to bitcoin, including pension funds, should not alter their approach as Congress switches from Republican to Democratic control, according to Sam Roberts, Cartwright's investment consulting director."Supportive U.S. legislation helps at the margin, but it should not be the trigger to review strategy," Roberts said. He added that the congressional switch makes the growing U.S. fiscal deficit even harder to change course on, potentially making a case for scarce assets such as gold and bitcoin.Ether was 7.4% lower at $2,246.54 after gaining almost 5% on Wednesday.Write to Dean Seal at [email protected] and Joseph Wilkins at [email protected]