Bitcoin Falls to Two-Month Low as Post-Midterm Fears of Tougher US Crypto Rules Hit Markets

Bitcoin fell to its lowest price since August in late Sunday trading, dropping more than 2 per cent to $73,708, as investors priced in the prospect of tougher regulation in the United States after the Democrats won control of both houses of Congress in last week's midterm elections. Ether fell about 5 per cent to $2,223, also its lowest since August. Source: Reuters

The slide continued into Monday. Bitcoin briefly approached $74,500, down about 2 per cent from 24 hours earlier, after rebounding from a weekly low of about $73,700 on Sunday. The cryptocurrency had dropped to around $73,761 late on Sunday before buying pressure pushed it back above $75,000, but that rebound failed to hold and the price slipped below the level again on Monday. Source: CoinDesk

Leveraged traders were caught out by the speed of the move. More than $1 billion in crypto positions were liquidated within 24 hours, according to CoinGlass data, with long positions accounting for about $931 million of the total. Ether liquidations came to about $455 million and bitcoin liquidations to about $278 million, and the largest single liquidation was an ether position worth about $48 million. Source: CoinGlass via CoinDesk

Institutional demand has also weakened. US spot bitcoin exchange-traded funds recorded net outflows of nearly $1.28 billion between November 2 and November 6, according to Farside Investors, with BlackRock's iShares Bitcoin Trust accounting for about $1.21 billion of the withdrawals. Last Friday alone saw a net outflow of $411.9 million. Sustained outflows matter to traders because fund redemptions can lead to bitcoin sales through settlement arrangements. Source: Farside Investors via CoinDesk

The trigger was political. The Democrats won control of both the House of Representatives and the Senate in the midterm elections on November 3, and traders are now pricing in a harder road for crypto-friendly laws. The industry-backed CLARITY Act, a bill that would set federal rules for crypto markets and decide whether the Securities and Exchange Commission or the Commodity Futures Trading Commission polices tokens and trading platforms, already stalled in the Senate in September. The new Congress does not take over until January 2027, and no new crypto law has been passed, so the tougher rules investors fear are expectations, not enacted laws. Source: Reuters

The market was already on edge before the election result. Bitcoin had jumped above $80,000 just after the vote, then gave back the gains, falling from $80,882 overnight on November 5 to $75,573 that afternoon, with the slide continuing into the weekend. Traders were also shaken by the reported $6.3 billion theft from Binance, the largest crypto theft on record. Geopolitical uncertainty added to the pressure, with stalled negotiations between Washington and Tehran weighing on risk-sensitive assets. Source: Reuters

Traders are now watching whether bitcoin can hold above the $73,000 area, with resistance near $75,600 and the recent low of about $73,692 the key level below. The next test comes on Tuesday, when the US Bureau of Labor Statistics releases October consumer price inflation data at 8:30 a.m. Eastern Time. ETF flows and any comments from Democratic leaders on the CLARITY Act will also be watched closely for a first read on whether the sell-off steadies or deepens. Source: CoinDesk

This article was researched and drafted with AI assistance and verified against multiple independent sources.