Why Did Bitcoin Drop Below $76,000 After Its Rally?

A Rapid 48-Hour Price Swing for Bitcoin

Crypto markets move fast, but the past 48 hours brought an unusually swift turn of events for Bitcoin. After jumping past $80,800 following the U.S. midterm elections, the price of Bitcoin suddenly reversed course and dropped toward $75,500 on Thursday, November 5.

This sharp pullback left many investors wondering what changed so quickly. Just a day earlier, market sentiment was climbing after a week overshadowed by news of the Binance exchange hack.

To understand why Bitcoin's post-election rally ended so fast, we need to look at three main factors: a major tech stock selloff on Wall Street, massive liquidations in crypto futures, and shifting demand in spot trading.

Wall Street Tech Stocks Triggered Broader Market Selling

Bitcoin often moves in step with traditional high-risk assets, particularly U.S. technology stocks. When traditional markets experience a sudden drop, digital assets frequently follow suit.

On Wednesday, investors initially welcomed the conclusion of election uncertainty. However, by Thursday, market attention shifted toward the potential economic and regulatory impact of Democrats winning control of both houses of Congress.

Specifically, traders grew concerned about potential government restrictions on artificial intelligence (AI) data center construction. This hit semiconductor companies that were already facing questions about their massive capital spending on AI infrastructure.

The resulting selloff on Wall Street was significant across key tech assets:

• The tech-focused Nasdaq index fell by 5.5% in a single day.
• Nvidia, a major producer of AI chips, dropped 9.3%.
• AMD suffered an even steeper decline, plunging by 17.3%.

As institutional investors moved to reduce risk across their portfolios, Bitcoin experienced selling pressure along with the rest of the high-growth sector.

Crypto Futures Saw Over $1 Billion in Liquidations

While stock market weakness set the backdrop, inner crypto market mechanics accelerated the decline. High leverage in futures trading can amplify price swings in both directions.

Part of Bitcoin's initial bounce on Wednesday was driven by short sellers closing out their bets against the market. However, once prices began falling on Thursday, the movement triggered a domino effect of long liquidations.

Data from market tracking platform CoinGlass revealed that over $1.08 billion in leveraged crypto positions were liquidated across exchanges within a 24-hour period.

Out of that total, approximately $954 million consisted of long positions—traders who had borrowed funds betting that Bitcoin would continue to rise. As prices hit their stop-loss levels, exchanges automatically sold their positions, adding further downward pressure.

Spot Market Dynamics Shifted from Buyers to Sellers

The selling pressure was not limited to derivative markets. Actual buying and selling activity on spot exchanges showed a clear shift in market sentiment over the 48-hour period.

According to spot trading data from Whalio, Binance recorded $141.2 million more aggressive buying than selling on November 4. On that day, buyers made up 54% of total trading volume.

However, that positive dynamic reversed rapidly. By late November 5, spot sellers exceeded buyers by 10.8% of total 24-hour turnover, marking one of the strongest selling imbalances recorded over the past month.

In the futures market, sellers led by 1.8% of total turnover. Meanwhile, open interest in Binance perpetual futures dropped by 7.1%, signaling that traders were actively closing out positions rather than opening new ones.

Institutional interest in the U.S. also showed signs of softening. CryptoQuant's Coinbase Premium Index slid from -0.09% on Wednesday down to -0.19% early Thursday. A negative premium indicates that spot prices on Coinbase were lower than on international exchanges, pointing to weaker demand from U.S. spot buyers.

Institutional Movements: BlackRock Outflows and Trump Media Wallets

Investors were also closely monitoring the activity of institutional funds and large corporate crypto holders during the price drop.

BlackRock's spot Bitcoin ETF (IBIT) recorded $201.2 million in net outflows on Wednesday, marking its fourth straight day of withdrawals.

However, the overall U.S. spot Bitcoin ETF market managed to stay net positive for the day, pulling in $74.6 million in net inflows thanks to strong capital inflows into Fidelity's ETF.

At the same time, blockchain data showed that crypto wallets associated with Trump Media transferred 4,259 BTCBTC-5.48%—worth approximately $342 million—to the Crypto.com exchange.

This large transfer raised concerns among market participants about potential selling, particularly ahead of a November 30 debt repayment window. However, no sale of these funds has been officially confirmed.

What Could Happen Next for Bitcoin's Price?

After the pullback, Bitcoin is currently testing support around the psychologically significant $75,000 level.

It is important to remember that digital assets are known for high price volatility, and past performance of digital assets is not a guarantee of future results.

Downside Risk Scenario

If Bitcoin fails to maintain support at $75,000, technical charts indicate that price could fall toward its 200-day moving average near $73,200. A continued decline in tech stocks or broader economic headwinds could increase the likelihood of this scenario.

Upside Recovery Scenario

Alternatively, if U.S. tech stocks stabilize and spot market demand returns, Bitcoin could attempt a recovery. To re-establish a bullish trend, buyers would first need to push price back above $80,000.

Technical analysis from Reuters notes that breaking past the 30-day moving average at approximately $81,300 would be necessary to confirm a sustained upward move.

In the short term, Bitcoin's trajectory will likely depend on whether Wall Street tech stocks find a floor and whether spot exchange buying picks back up.