Bitcoin price drops to $75,618, hitting a seven-week low; in the past 24 hours, nearly $300 million was liquidated from long positions in cryptocurrencies.
On Wednesday, Bitcoin ( BTC ) attempted to recover from the 3% decline from the previous day, as the crypto market was digesting the results of the Democrats' sweeping victory in the mid-term elections.
Key points:
- As the Democratic Party won control of the House of Representatives and the Senate in the U.S. midterms, Bitcoin fell to $75,618.
- BTC / USD rebounded above the resistance level of $78,000, while the S&P 500 index futures fell 0.3% on Wednesday.
- Analysts warn that Bitcoin must hold onto its current 50-week moving average of $75,733, otherwise there could be a deeper correction.
U.S. mid-term elections voting caused Bitcoin to fall below $76,000
TradingView data shows that as election results were announced one after another, BTC / USD fell before the close on Tuesday, after which the Democratic Party won control of both the House of Representatives and the Senate. The trading pair dropped to $75,618 on Bitstamp, hitting its lowest level since September 16, before rebounding to a high of $78,039 within the following three hours.
CoinGlass data shows that this price decline led to the liquidation of Bitcoin long positions below $76,000, while the sell order wall limits the upside potential below $78,000. In the past 24 hours, the total amount of cryptocurrency long positions liquidated was $288 million.
Talos, the head of institutional digital asset trading platform research at Kelly Ye, stated in a comment sent to Cointelegraph that the market has largely digested the election results.
"Bitcoin fluctuated by about 1.7% after the voting ended, which is close to the approximately 1.8% reflected in option pricing, and there were no large-scale leveraged liquidations. The election was a major event, but the market was already largely prepared for it," she said.
Similar trends were observed in U.S. stock index futures, with initial declines followed by some recovery. At the time of writing this article, both the S&P 500 Index futures and the Nasdaq 100 Index futures had fallen by about 0.3%.
Later on Tuesday, Anthony Saglimbene, the chief market strategist at financial services company Ameriprise Financial, stated in an interview with CNBC that concerns regarding data center investments and, more broadly, capital expenditures in artificial intelligence, are having a negative impact on the market reaction to the Democratic Party's victory.
“What would it mean for data center construction if some governorships were also won by the Democrats? In the past few weeks, there has been a lot of skepticism in the market about the capital expenditures of hyperscale cloud service providers,” he asked.
In an interview with The Wall Street Journal, U.S. President Donald Trump previously stated that he might become “Mr . Veto” to prevent Democratic policy initiatives, but this time his tone was more moderate.
“I think we will cooperate with the Democrats, and we will get along very well,” he said.
The 50-week trend line for Bitcoin is key to avoiding a "deeper correction"
When Bitcoin fell to $75,618, it just touched its 50-week simple moving average ( SMA ). Since mid-September, this trend line has been acting as a support level.
In an analysis published on Platform X, crypto, trading, suite, Material Indicators (co-founders), and Keith Alan consider the 50-week SMA level to be a watershed for the bullish trend of Bitcoin. They believe that if this level cannot be held, it will open the door to a "deeper correction."
Cryptocurrency trader and analyst Rekt Capital previously predicted that after failing to break above $78,000, BTC / USD would fall below $76,000. On Wednesday, he continued to highlight the resistance level above on the three-day chart.
"If this situation continues, then these newly formed three-day lows could potentially pull prices back down towards around $755,000 over time," he said on Wednesday.
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