US stocks and cryptocurrency markets fell sharply after Democrats won both chambers of Congress, with investors reacting to potential tighter rules on the artificial intelligence industry and plans to investigate Trump family business dealings, including crypto-related ventures.
Equities and Crypto Selloff
The Nasdaq Composite dropped 5.10% in intraday trading, while the S&P 500 fell 3.43%. The Dow Jones Industrial Average declined 2.41%. Major digital assets also moved lower alongside equities.
Bitcoin fell 5.97% to $75,695.68, according to Binance market data, touching a session low of $75,568. Ether dropped 7.29% to $2,247.74 after reaching a low of $2,236.78.
Heavy Liquidations
CoinGlass data shows that $879.92 million in crypto positions were liquidated over the past four hours, with long positions accounting for $818.90 million and short positions making up $61.02 million. Over the past 24 hours, total liquidations reached $1.03 billion, affecting 198,192 traders. The largest single liquidation occurred on Binance’s ETHUSDT pair at $10.94 million.
Most forced closures came from traders holding bullish bets as volatility increased through the session.
Regulation Concerns Cited
The Kobeissi Letter shared its view on the selloff in a post on X, asking what fundamentally changed over the previous 24 hours. It said the Midterm Election results alone could not explain the decline, since markets had already priced in the outcome.
According to the post, one likely catalyst is concern over a possible ban on AI or severe regulation. Democratic lawmakers recently called for limits on advanced AI development, and some called for an outright ban on artificial superintelligence. The firm said these calls may have added to the sudden shift in sentiment.
However, The Kobeissi Letter does not expect an outright ban to happen, saying enforcement would mean the US surrendering its AI lead to China. It also said the decline does not mean AI is over, calling this moment part of the biggest technological revolution in human history.
Instead, the firm described the move as a sudden sentiment shift meeting excessive leverage, which may have triggered forced liquidations by several major institutional investors. It called the downturn more technical than fundamental, while regulation concerns remain legitimate, and described price action as neither orderly nor rational. The firm advised investors to stay calm.
