Democrats sweep Congress, markets crack: $1.03B in crypto liquidations

US stocks and digital assets fell in tandem as investors digested a Democratic sweep of both chambers of Congress. The Nasdaq Composite dropped 5.10% intraday, the S&P 500 gave up 3.43%, and the Dow Jones Industrial Average slipped 2.41%. Crypto took the harder hit.

Bitcoin fell 5.97% and was last trading at $75,695.68, per Binance market data, after touching a session low of $75,568. Ether dropped 7.29% and sat at $2,247.74, having bottomed near $2,236.78. Both coins moved in lockstep with equities the whole way down.

The forced selling came fast. CoinGlass data shows $879.92 million in crypto positions were liquidated in just four hours, with longs accounting for $818.90 million and shorts making up the remaining $61.02 million. Over 24 hours, liquidations climbed to $1.03 billion and hit 198,192 traders. The single biggest hit was a $10.94 million liquidation on Binance's ETHUSDT pair.

The selloff wasn't only about the ballot box, according to The Kobeissi Letter. In a post on X, the firm asked what fundamentally changed in the past 24 hours and argued the midterm results alone couldn't explain the drop, since markets had already priced in the outcome. It pointed instead to fears of an outright ban on AI or severe regulation, noting Democratic lawmakers have recently pushed for limits on advanced AI development and even a ban on artificial superintelligence.

Kobeissi doesn't expect a full ban to materialize, arguing it would mean the US handing its AI lead to China, and said the pullback doesn't signal the AI story is finished. It framed the move as a sudden sentiment shift colliding with excessive leverage, which likely triggered forced liquidations by several major institutional investors.

That makes the downturn look more technical than fundamental to Kobeissi, even as it called the regulation concerns legitimate. The firm described the price action as neither orderly nor rational and told investors to keep their heads as the slide played out.