Bitcoin erases post-election gains as Wall Street selloff triggers over $1 billion in crypto liquidations

The tech-focused US Nasdaq share index is poised for its worst single-day decline in 18 months, after plummeting up to 5% on Thursday due to concerns over potential tighter regulation of the artificial intelligence industry following recent midterm elections. As Wall Street experienced widespread losses, the Nasdaq composite fell into 'correction territory' – over 10% below its recent peak.

The index is on track to record its largest one-day drop since April 2025, when Donald Trump announced his 'liberation day' tariffs on US trading partners. Investors are worried about the high spending on AI, which has spilled over to other global stock markets as they anticipate stricter oversight of data center expansion plans.

Chip stocks led the decline, with memory producer SanDisk dropping 19% and hard drive maker Western Digital falling 16.5%. Wall Street's 'fear index', the VIX, surged by 40% to its highest level since early weeks of the Iran war, indicating heightened market volatility. Analysts noted that Democratic governors are expected to impose restrictions on datacenter rollouts after their success in gubernatorial races this week.

US voters also rejected datacenters in various local ballots across the country. Neil Wilson, an investor strategist at Saxo UK, described the situation as a "complete capitulation level event" in tech stocks, warning that a total momentum reversal could occur as Democrats take control of the frontier and hinder datacenter development.

The Dow Jones industrial average (DJIA) of 30 major US companies fell over 1,000 points in late morning trading, a 2% decline to 52,264 points. Nvidia, a key player in the AI boom, was the biggest loser on the DJIA, falling 6.7%, followed by Goldman Sachs, which dropped 5.7%. The sell-off marked a sharp contrast to Wednesday's rally, when Wall Street stocks surged to their biggest daily gain in months as investors anticipated the Democratic party's victory in the US midterm elections, which could curb the White House's agenda.

Tech analyst Dan Ives cautioned that the midterm results signaled a slowdown in the pace of datacenter construction. He added that the Democrats' control, particularly in the Senate, would create significant obstacles for AI and tech legislation in the coming years.