Bitcoin's two-day whiplash burns $731M as election rally fizzles

Bitcoin traders got gut-punched from both directions this week. BTC ran from $75.7k to $81.2k on November 4, torching $407.92 million in liquidations — and $309.98 million of that came from shorts scrambling to cover. The very next day, the reversal handed longs the bill: $323.54 million in liquidations, with $294.11 million on the long side. Add it up and roughly $731 million got wiped out in two sessions.

The damage spilled across the whole market. Total crypto market capitalization dropped $132.7 billion on November 5 alone, pushing losses from the local peak to $149 billion, according to AMBCrypto. The short-lived bullish mood that followed the midterm election results got steamrolled by a pullback in equities, with heavyweight AI stocks catching the selling pressure.

The crowd's timing was almost comically bad. Santiment noted that crypto traders turned optimistic right after the November 4 election results — a surprise setup that showed up in the sheer volume of short liquidations. FOMO and forced buying shoved BTC past $81k, briefly. Then short-term FUD tied to selling in traditional markets across the globe triggered the reset. Both swings ran against what the crowd expected, a reminder that retail sentiment extremes often work as counter-signals.

Glassnode isn't reading it as a stampede for the exits. The analytics firm posted on X that crypto traders are still here, even after a month-long retrace from $87k. Bitcoin volume had sunk to its lowest level since 2023 before August's rally from $60k kicked off — and it has stayed above those August levels since, a sign of sustained trader and investor interest.

Crypto analyst Axel Adler Jr. flagged that short liquidations hit their highest levels since late September, and noted the Binance heist has weighed heavily on sentiment. Meanwhile, short-term holder supply has swelled by 600k BTC since July — coins moving from long-term hands to newer participants, which tends to make the market more twitchy about short-term price moves.

The level to watch now is the True Market Mean at $77.6k, which tracks the average cost basis of active investors while filtering out lost or dormant coins. Bitcoin's brief trip above it didn't stick, and slipping below leaves the average investor underwater. That, per the analysis, is a cooling signal — and a possible warning of a deeper correction ahead.