DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.

Bitcoin tumbled below $76,000 on Thursday as investors retreated from riskier assets during a broad selloff in United States stocks. The decline threatened to wipe away the previous day’s post election rally across both cryptocurrency and equity markets.

The world’s largest cryptocurrency fell 5% on Thursday, reversing a sharp rebound that had pushed bitcoin above $80,000 on Wednesday. Investors had welcomed midterm election results showing that Democrats swept both chambers of Congress.

That enthusiasm quickly faded as major stock indexes surrendered their Wednesday gains. Bitcoin’s retreat showed how rapidly sentiment could turn after the post election advance lifted prices across risk assets.

The cryptocurrency decline also pulled several prominent crypto stocks sharply lower. Shares of Coinbase Global, Robinhood, Strategy, and Bullish each fell 9% or more as investors moved away from companies tied closely to digital asset trading and prices.

Losses spread across the broader digital asset market during the same period. The global market value of crypto assets dropped 5%, erasing $370 billion, according to data from Coinmarketcap.

Yahoo Finance disclosed that it has a partnership with Coinbase. The sharp decline in Coinbase shares came as pressure spread through both cryptocurrency prices and publicly traded businesses connected to the industry.

Bitcoin’s latest slide followed a warning earlier in the week from digital asset research firm K33. The firm said unusually thin trading activity, combined with greater use of leverage, had positioned bitcoin for sharp price swings following the midterm election results.

The warning placed attention on trading conditions that could magnify market moves. Thursday’s decline arrived one day after bitcoin’s sharp rebound above $80,000, demonstrating the severe price swings K33 had identified.

The retreat also highlighted continued fragility in the cryptocurrency market after the $6.3 billion hack of Binance. The attack on the world’s largest cryptocurrency exchange rattled crypto prices during the previous week.

Political uncertainty added another source of pressure for the industry. The Democratic takeover of Congress raised new questions about the cryptocurrency sector’s prospects in Washington, including the fate of its long stalled bill known as the Clarity Act.

Brian Gardner, Stifel’s chief Washington policy strategist, said during a Thursday briefing with reporters that the Clarity Act was unlikely to move forward before the end of the year. “It's off the table for the lame duck session,” Gardner said.

Gardner also cast doubt on the prospect of lawmakers reaching an agreement after the new Congress takes office. He said the odds of a bipartisan compromise in the next Congress were “pretty low.”

The expected leadership of the Senate Banking Committee could bring further scrutiny for the industry. Gardner said he expects Senator Elizabeth Warren, who is poised to chair the committee, to pursue investigations targeting cryptocurrency firms, Wall Street banks, and private equity firms.

Not every assessment of the election results was negative for bitcoin. Sean Farrell, Fundstrat’s head of digital assets, offered a more favorable interpretation in a Wednesday afternoon note to clients.

Farrell argued that the decisive Democratic victory in Congress could increase bitcoin’s appeal as a hedge against larger federal deficits. His view provided a potential silver lining even as the cryptocurrency fell below $76,000 and the wider digital asset market lost hundreds of billions of dollars in value.

The competing assessments left bitcoin caught between market volatility and political uncertainty. Investors were confronting thin trading, increased leverage, the effects of the Binance hack, falling crypto stocks, and doubts about whether the Clarity Act could advance.

Thursday’s action erased much of the optimism that had pushed bitcoin above $80,000 only one day earlier. With stocks also retreating from their post election rally, the cryptocurrency market again showed its sensitivity to changing investor appetite for risk.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.