According to reports, cryptocurrency markets suffered a fierce wave of selling on Thursday, pressured by disappointing chip company earnings and concerns that Democrats winning control of Congress could weigh on risk assets. By Friday, the selling had paused, and Bitcoin edged higher in response.
Data shows Bitcoin is currently trading around the $76,000 mark, after the world's largest cryptocurrency had stood above $80,000 just a day earlier, posting a single-day decline of nearly 6%. On Friday, smaller-cap cryptocurrencies also broadly recovered, with BNB, ZCash, and HYPE all gaining between 1% and 3%.
On Thursday, the S&P 500 recorded its largest single-day drop in over a year. Market expectations that a Democrat-led government could restrict data center expansion weighed on chip stocks. On Friday, futures for the benchmark index and the tech-heavy Nasdaq 100 edged higher, lifting trader sentiment, and the optimistic mood spilled over into crypto assets.
"Bitcoin appears to be getting some breathing room after yesterday's heavy selloff, though I wouldn't rush to call this a reversal just yet," said Dean Chen, an analyst at crypto exchange Bitunix, in an email. "I'd rather describe the current move as selling pressure easing rather than a new round of position-building taking shape."
On October 29, digital asset exchange Binance suffered a hack involving $6.3 billion, shaking the entire industry and dampening investor enthusiasm for the asset class. Cryptocurrencies remain on unstable footing to this day. Broader market volatility has further amplified the impact—in recent years, many crypto mining companies pivoted into the artificial intelligence (AI) sector, causing the plunge in AI stocks to spill over into crypto markets.
"This selloff reflects growing doubts about the returns on massive AI spending, concerns that stricter regulation could slow data center construction, and a broader retreat from high-valuation growth assets," said Axel Rudolph, senior technical analyst at IG. "However, with stocks continuing to slide, Bitcoin has so far held its ground, suggesting buyers are stepping in to defend current levels. This relative strength could be an important test of whether Bitcoin is beginning to decouple from tech stock trading rather than simply following them lower."
Compiled data shows that U.S. spot Bitcoin ETFs recorded $430 million in outflows on Thursday. Fidelity's Wise Origin Bitcoin Fund led with about $200 million, followed by BlackRock's IBIT with roughly $105 million in outflows.
"The selling does appear to be easing, but the recent bounce looks more like a brief breather than a sustained recovery," said Samuel Leyne, co-head of crypto trading at Marex. "You need a real catalyst to restore confidence, whether that's geopolitical de-escalation, falling oil prices, or an improved macro backdrop," he added. "Until then, we have to watch stocks, ETF flows, and basis levels. Bitcoin needs to reclaim $77,000 to build upward momentum, and if stocks keep sliding, $75,000 will come back into view."