Bitcoin lost more than $2,000 in a few hours overnight on November 4 and dropped to $75,700. The decline began after the first results of the US midterm congressional elections.
Midterm elections are a vote on the composition of Congress in the middle of a presidential term. The first counts showed a Democratic lead in both chambers, and the market read this as a risk for technology companies and crypto.
Why this matters to a trader. The move went there and back in a single night, affecting both crypto and US index futures.
How did the price move?
Late on Tuesday, Bitcoin approached $78,000. After the first votes were counted, it went to $75,700, and by the Asian session it had recovered to $76,700.
- An almost zero net result - over the day, Bitcoin returned roughly to where it started
- The entire move happened overnight - the market worked through a move down and back by morning
What is the market afraid of?
The main argument is regulation. Jeff May, chief operating officer of the BTSE exchange, recalled that Democrats oppose the CLARITY Act.
The CLARITY Act is a bill that is supposed to set the rules for how the crypto market operates in the US. Without it, regulation remains unpredictable.
What about the other assets?
Solana is holding up the worst. SOL has lost about 24% in four weeks - more than twice as much as Bitcoin over the same period. The coin traded just below $92 after breaking through $90.
- ETH. Around $2,260.
- XRP. Up 1%, to $1.27.
- BNB. Down 1%, to $689.
- ZEC. Up 5%, to roughly $1,200, after falling 10% the day before.
Traditional markets moved in sync too. S&P 500 futures -1.3%, erasing the morning gain of 0.5%. Nasdaq 100 futures -2.3%, the MSCI Asia Pacific index almost -2%.
- 4.90% - the yield on 10-year US Treasuries, down 6 basis points
- The dollar - weakened against almost all major currencies
What happens next?
Votes are still being counted. Until the final composition of Congress is announced, crypto remains hostage to political headlines.
Bitcoin exchange-traded funds are funds that trade like a stock and hold the coin on behalf of the investor. Outflows are coming from them, and that is also weighing on the price.
The main thing: in the coming days, the movement will be driven by news from Congress. For US market dates, see the economic calendar.
Did you watch that overnight candle?
Two thousand dollars down and almost as much back in a single night. At a moment like that, position size matters more than any forecast. In an account of a couple of thousand, a swing like that produces a result you won't be able to spot in a monthly report. In prop trading, the trading capital is provided by the company: you pay for the evaluation, pass it according to its risk rules, and take an agreed share of the profit. Votes are still being counted, so it's worth understanding the mechanics before the next night like this.