Bitcoin Drops 5% as AI Stock Selloff and Post-Election Policy Questions Spark $428M in Crypto Liquidations

Bitcoin tumbled nearly 5% on Wednesday, erasing the gains from a rally that had been fueled partly by short covering. The selloff came as AI stocks sank and Democratic midterm election wins raised fresh questions about future policy direction, creating a risk-off mood across markets. The sharp move wiped out $428 million in crypto long positions, according to data cited in the report, highlighting the fragility of leveraged bets in a volatile environment. The pullback underscores how digital assets remain tightly linked to broader equity sentiment, particularly high-growth technology shares. With investors reassessing the political landscape and its potential impact on regulation and fiscal policy, near-term uncertainty is likely to keep crypto markets choppy. The episode serves as a reminder that momentum can reverse quickly when macro forces shift, leaving over-leveraged traders exposed to sudden corrections.