Bitcoin Returns to $76,000 After a Harrowing Night: Sell-Off Pauses, but Analysts Warn "Don't Rush to Call a Reversal"

The cryptocurrency market suffered a sharp sell-off on Thursday after chip company earnings disappointed and Democrats winning control of Congress weighed on risk assets. By Friday, the selling had paused, and Bitcoin recovered modestly. Data shows Bitcoin is currently trading near $76,000, after the largest cryptocurrency by market cap had stood above $80,000 the previous day, a single-day drop of nearly 6%. On Friday, smaller-cap cryptocurrencies also broadly recovered, with BNB, ZCash and HYPE all gaining between 1% and 3%. On Thursday, the S&P 500 posted its biggest single-day decline in more than a year. Expectations that data center expansion could be restricted under Democratic control weighed on chip stocks. On Friday, futures on the benchmark index and the tech-heavy Nasdaq 100 edged higher, lifting trader sentiment, and the optimism carried over into crypto assets. "Bitcoin appears to be getting some breathing room after yesterday's sharp sell-off, though I wouldn't rush to call this a reversal just yet," Dean Chen, an analyst at crypto exchange Bitunix, said in an email. "I'd rather describe the current move as selling pressure easing rather than a new round of position-building having formed." On October 29, digital asset exchange Binance suffered a hack involving $6.3 billion, shaking the entire industry and denting investor enthusiasm for the asset class, and crypto remains on unstable footing to this day. Volatility in the broader market has compounded the blowin recent years, many crypto mining companies have pivoted into the artificial intelligence (AI) sector, causing the plunge in AI stocks to spill over into the crypto market. "This sell-off reflects growing doubts about the returns on massive AI spending, concerns that stricter regulation could slow data center construction, and a broader retreat from highly valued growth assets," said Axel Rudolph, senior technical analyst at IG. "However, with stocks continuing to slide, Bitcoin has so far held its ground, suggesting buyers are stepping in to defend current levels. This relative strength could be an important test of whether Bitcoin is starting to decouple from tech stocks rather than simply following them lower." Compiled data shows U.S. spot Bitcoin ETFs recorded $430 million in outflows on Thursday. Fidelity Wise Origin Bitcoin Fund led with about $200 million, followed by BlackRock's IBIT with outflows of about $105 million. "The selling does appear to be fading, but the recent rebound looks more like a brief breather than a sustained recovery," said Samuel Leyne, co-head of crypto trading at Marex. "You need a real catalyst to restore confidence, whether that's de-escalation in geopolitics, a pullback in oil prices or an improvement in the macro picture," he added. "Until then, we have to watch stocks, ETF flows and basis levels. Bitcoin needs to reclaim $77,000 to build upward momentum, and if stocks keep sliding, $75,000 comes back into view."