TradingKey - U.S. midterm elections underway, crypto market drops 2%, BTC falls below $77,000.
On November 3, as voting officially began in the U.S. midterm elections, the total cryptocurrency market capitalization fell 2.54% in a single day to $2.57 trillion, hitting a near two-month low. Meanwhile, Bitcoin (BTC) broke below the round-number support level of $77,000, dipping near $76,500 intraday to officially retest and challenge its September low.
Bitcoin price chart, Source: TradingView
As the midterm elections progress, with Amazon (AMZN) and Alphabet (GOOG) seeing heavy CapEx strain free cash flow, global capital risk appetite has been significantly dampened. As high-beta assets most sensitive to global liquidity, cryptocurrencies have also come under pressure amid the valuation correction in U.S. tech stocks.
In addition, although over $3 billion in assets have been successfully frozen following the Binance hack and the SAFU fund provided full compensation, the market still needs time to fully digest liquidity restoration from withdrawals following the black swan event. Over the past two trading days alone, Bitcoin spot ETFs saw net outflows of over $1 billion, reflecting institutional investors' risk-averse stance during the high-risk pre-election window.
Historical data from past U.S. midterm elections show that BTC typically undergoes a defensive pullback or bottoming phase of 5%–10% on the eve of voting, until the election dust settles and political uncertainty is eliminated, after which the post-election primary rally resumes. Over the next 24 to 48 hours, Bitcoin prices are prone to violent volatility, with a strong possibility of a sharp spike down to $75,000.