Bitcoin Falls 6% to Seven-Week Low as Stocks Reverse Gains

Bitcoin fell below $76,000 and briefly traded below its 50-week simple moving average, which stood at about $75,733. Traders had been watching the average as a possible support level for the cryptocurrency.

The sell-off spread across major U.S. stock indexes. The S&P 500 fell 2.7%, while the Nasdaq Composite dropped 4.2% to its lowest level since July 29. The indexes had risen after Democrats won control of both chambers of Congress in the midterm elections, but those gains reversed on Thursday as investors sold technology shares.

Oil prices rose during the session. West Texas Intermediate crude moved above $90 a barrel, while Brent crude gained 2.5% to approach $97. The increase followed reports of new attacks on tankers in the Middle East and uncertainty about how Democrats might respond to the U.S.-Iran war.

“ We may be headed for more volatility as investors digest the election results and potential policy implications,” Jordan Watson, a portfolio manager at Tandem Investment Advisors, said. Watson described the gains in equities after the election results as not an “all-clear signal.”

Economist Mohamed El-Erian questioned whether the change in congressional control would have a lasting effect on technology companies. In a blog post, he wrote that it remained unclear whether a shift in Congress would slow the technology sector and whether the broader market and economy could perform without support from technology earnings and spending.

Crypto market liquidations reached nearly $500 million during the first hour of U.S. trading, according to CoinGlass. Total liquidations over the previous 24 hours approached $850 million at the time of reporting, reflecting losses on leveraged positions.

Bitcoin was testing the lower boundary of its monthlong trading range. A sustained break below the 50-week average could put further pressure on the price, while a recovery above the level would leave it as a possible support area.

Crypto trader Rekt Capital wrote that Bitcoin’s recent trading pattern resembled its behavior in May. Bitcoin then traded near $80,000 before breaking lower and reaching lows near $57,000 in late June.

Reviewed and fact-checked by Alex Panasenko on November 5.