That steep drop in U.S. stocks last night dealt the crypto market a blow too.
The Nasdaq fell 5.52% on November 5, closing at 24,315. It was the biggest single-day drop since April 2025, and it has now pulled back nearly 12% from its October 6 record high, officially entering a technical correction. The S&P 500 fell 4.36%, and the Dow dropped 3.44%—the worst day for all three indexes since April 2025.
Chips took the hardest hit: the Philadelphia Semiconductor Index plunged 12.25% in a single day, its biggest drop since the pandemic in March 2020. Nvidia fell 9.26%, AMD 17.26%, Micron 17.46%, and Tesla 10.77%. The VIX fear index surged around 70% in one day, reaching 28.18.
Two things collided to spark the sell-off: Democrats won the midterm elections, stoking fears of tighter AI regulation; and Microsoft reassessed its data center investment plans. Expectations of slower data center construction directly pulled the valuation anchor out from under the AI narrative.
Crypto couldn't escape the fallout. $BTC is now at $75,986, down 4.55% over 24 hours; $ETH 2240 is at $824,804, down 6.28%. Gold, meanwhile, rose 0.46% to $4,091.8, as money flowed into safe-haven assets.
I see this as a retreat in risk appetite rather than a single isolated negative catalyst: the AI trade in U.S. stocks had been overcrowded for too long, and even the prospect of regulation was enough to trigger profit-taking. Crypto, as a high-beta asset, was bound to follow the market lower. I’m not catching falling knives in the short term—I’ll wait for the VIX to ease and the Nasdaq to stabilize. If you’re holding positions, don’t add leverage over the next couple of days. Staying in the game matters more than buying the dip.
The Nasdaq fell 5.52% on November 5, closing at 24,315. It was the biggest single-day drop since April 2025, and it has now pulled back nearly 12% from its October 6 record high, officially entering a technical correction. The S&P 500 fell 4.36%, and the Dow dropped 3.44%—the worst day for all three indexes since April 2025.
Chips took the hardest hit: the Philadelphia Semiconductor Index plunged 12.25% in a single day, its biggest drop since the pandemic in March 2020. Nvidia fell 9.26%, AMD 17.26%, Micron 17.46%, and Tesla 10.77%. The VIX fear index surged around 70% in one day, reaching 28.18.
Two things collided to spark the sell-off: Democrats won the midterm elections, stoking fears of tighter AI regulation; and Microsoft reassessed its data center investment plans. Expectations of slower data center construction directly pulled the valuation anchor out from under the AI narrative.
Crypto couldn't escape the fallout. $BTC is now at $75,986, down 4.55% over 24 hours; $ETH 2240 is at $824,804, down 6.28%. Gold, meanwhile, rose 0.46% to $4,091.8, as money flowed into safe-haven assets.
I see this as a retreat in risk appetite rather than a single isolated negative catalyst: the AI trade in U.S. stocks had been overcrowded for too long, and even the prospect of regulation was enough to trigger profit-taking. Crypto, as a high-beta asset, was bound to follow the market lower. I’m not catching falling knives in the short term—I’ll wait for the VIX to ease and the Nasdaq to stabilize. If you’re holding positions, don’t add leverage over the next couple of days. Staying in the game matters more than buying the dip.