Last Thursday’s sharp sell-off pulled global risk assets straight back to reality from their post-election euphoria.
The Nasdaq Composite fell 5.52% in a single day, the S&P 500 dropped 4.36%, and the Dow Jones fell 3.44%; the Nasdaq 100 slid 6.4%, while the Philadelphia Semiconductor Index plunged about 12%. The sell-off was concentrated in the AI and data center supply chain: Nvidia fell more than 9%, Tesla nearly 11%, and crypto-related stocks such as Coinbase and Strategy also dropped about 9%.
This wasn’t bad news for any one company; rather, the market is reassessing the payback period for AI investments. The new political landscape could add uncertainty around data center construction, energy consumption, and industry regulation, while some chipmakers’ earnings and guidance have fallen short of lofty expectations. As the most crowded AI trades begin to unwind, investors naturally cut exposure first to the assets with the highest valuations and greatest sensitivity to market swings.
The crypto market came under pressure in tandem. $BTC quickly fell from around $81,000 to below $76,000, with approximately $1.09 billion in liquidations over 24 hours, affecting more than 210,000 traders, the vast majority of them long. Stocks and cryptocurrencies fell together during the same trading session, indicating a broad pullback in risk rather than a new credit crisis within the crypto industry.
On Friday, U.S. stocks did see an initial rebound. The Nasdaq rose 1.1%, the S&P 500 gained about 0.3%, and Nvidia recovered around 2.8%. But the Dow still fell about 0.5%, and none of the three major indexes recouped Thursday’s losses. This looked more like a technical bounce after a sharp selloff than evidence that AI assets had completed their repricing.
U.S. nonfarm payrolls data released the same day added another layer of pressure. Employment increased by 165,000 in October, far above the market forecast of 65,000; the unemployment rate fell to 4.1%, and average hourly earnings rose 0.4% month over month. Strong employment is good for the economy and corporate earnings, but it also means the Federal Reserve has little reason to rush into easing policy. For high-valuation tech stocks and crypto assets, a “strong economy” does not necessarily mean short-term gains, because interest rates may remain elevated for longer.
By Monday this week, the crypto market had not followed Friday’s rebound in tech stocks. As of this morning, $BTC was around $75,012, down 1.13% over 24 hours, after hitting an intraday low of $73,510; $ETH was around $2,143, down 4.21%; $SOL was around $87.68, and $XRP around $1.112. In particular, $ETH and $XRP were notably weaker than $BTC, indicating that investors are still actively reducing their exposure to higher-beta assets.
This shift is important: last Thursday, the crypto market was mainly dragged down by U.S. stocks. By the weekend and Monday, U.S. markets were closed, yet crypto prices continued to weaken, showing that the pressure was no longer coming solely from external spillovers. ETF redemptions, fragile confidence after the leverage flush, and the lack of timely follow-through from spot buyers are becoming problems of the crypto market itself.
Going forward, it is not enough to look for a rebound; the quality of that rebound matters. For U.S. stocks, watch whether the Nasdaq and AI leaders can stabilize for several consecutive sessions. For crypto, $BTC first needs to hold the weekend low near $73,500, then reclaim the $76,000–$80,000 range. If $BTC rebounds while $ETH and $SOL continue to lag, the market will remain in defensive mode.
Last Thursday’s plunge showed the market that the AI narrative has not disappeared, but investors are no longer willing to pay high valuations unconditionally. Weekend price action in crypto further showed that crypto assets cannot rely solely on a rebound in U.S. stocks for support. A genuine recovery will require stocks to stop repricing lower and the crypto market to see sustained spot buying return.