The optimism that followed the U.S. midterm elections quickly faded as AI stocks faced a sharp sell-off. Cryptocurrencies also came under pressure, but their declines were relatively smaller despite more than $1 billion in liquidations across the digital asset market.
Wall Street recorded its worst daily performance since President Donald Trump introduced his Liberation Day tariffs in April 2025.
The Nasdaq tumbled 5.5%, while the S&P 500 dropped 4.3%. The Dow Jones Industrial Average (DJIA) also declined 3.4%.
Technology-heavy stocks led the broader market downturn as investors continued unwinding positions in the AI sector. The Nasdaq 100 plunged 6.4%, posting its biggest daily decline since the COVID-19 market crash in March 2020.
Semiconductor stocks suffered even heavier losses. The Philadelphia Semiconductor Index dropped 12% on Thursday, marking its steepest one-day decline since March 2020.
Bitcoin fell 5.2% over 24 hours, slipping below $76,000. Ethereum’s Ether (ETH) declined 7.5% to $2,241.47, while XRP and Solana both lost around 5.5%.
Gold moved higher as investors sought protection from the broader market turbulence. Although prices retreated from an earlier high, gold remained up 0.6% at approximately $4,094 per ounce.
The sell-off came as markets assessed the possible implications of Tuesday’s U.S. midterm elections, which resulted in Democrats securing control of both chambers of Congress. Investors are increasingly concerned that political opposition could slow data center development, potentially affecting the AI infrastructure boom that has become a growing source of demand for Bitcoin miners.
Joshua Lim, global co-head of markets at institutional crypto brokerage FalconX, said investors were beginning to reassess the consequences of a possible slowdown in data center expansion.
He explained that Wednesday’s recovery was largely driven by traders closing bearish positions ahead of an election outcome that had already been widely anticipated by markets.
Carlos Guzman, vice president of research at digital asset trading firm GSR, said uncertainty surrounding the profitability of massive AI infrastructure investments was already affecting investor sentiment. The election results have added further pressure to those concerns.
He noted that stronger political resistance to data center projects could delay AI infrastructure development, raising additional questions about whether the enormous investments flowing into the sector will generate sufficient returns.
Guzman also identified weaker-than-expected semiconductor earnings as another contributor to the market downturn.
Bitcoin and Crypto Market Face $1B Liquidation Wave
Despite widespread selling, major cryptocurrencies experienced smaller losses than several equities associated with the AI sector.
Bitcoin declined approximately 5.5% over the previous 24 hours, surrendering much of its Wednesday recovery and moving back toward its earlier trading range.
The price reversal triggered substantial liquidations in derivatives markets as traders holding leveraged bullish positions were forced to exit.
CoinGlass data showed that more than $1 billion in crypto derivatives positions were liquidated within 24 hours, with long positions accounting for most of the losses. The event represented the largest liquidation wave since at least October 28–29, when Bitcoin fell from nearly $82,000 to around $76,000.
Guzman said the previous day’s rebound had benefited from improved geopolitical sentiment following the midterm elections. However, investors shifted toward reducing risk exposure on Thursday, while excessive leverage intensified the market decline.
Jasper De Maere of crypto market maker Wintermute urged investors not to draw broader conclusions from a single day of negative price action.
He highlighted that cryptocurrencies had held up relatively well compared with AI-related stocks during the latest sell-off. He also pointed to continued adoption across the digital asset industry as a factor supporting its longer-term prospects.
De Maere acknowledged that short-term market conditions remain uncertain but maintained a positive outlook for the medium term. He added that investors could monitor price adjustments for potential buying opportunities, particularly as correlations between different asset classes remain strong.
