According to Woofun AI, the sharp shock in the US tech stock market quickly spread to the crypto asset sector, causing the price of Bitcoin to fall below the key psychological threshold of $76,000. The core driving force behind this round of sell-offs was not cryptographic native factors, but stemmed from market concerns about tighter regulation of the AI industry after the US midterm elections and expectations of a slowdown in infrastructure investment by tech giants.
This macro-level uncertainty directly triggered a chain reaction of leveraged liquidation in the derivatives market, causing the entire risk asset sector to fall into a deep correction, and none of the mainstream digital assets were spared. Judging from the microstructure of the market, the spread of panic far exceeded expectations, and investors were forced to deleveraging in a very short period of time, which in turn exacerbated the irrational decline in prices.
According to data compiled by Woofun AI, the origin of the current market turmoil can be traced back to the performance of the US stock market on the 5th local time. The Nasdaq Composite Index fell sharply by 5.52% in a single day, while the Philadelphia Semiconductor Index, which represents the semiconductor industry, fell by as much as 12.25%, indicating extreme avoidance of capital from the hard technology sector. In terms of individual stocks, Nvidia (NVDA.US) fell 9.26%, and AMD (AMD.US) and Micron Technology (MU.US) both fell by more than 17%. This collective decline in leading technology stocks directly affected the market's confidence in the AI industry chain. Within the crypto market, SosoValue's data on the morning of the 6th revealed sharp declines: BTC fell 5.66% in 24 hours, ETH fell 7.71% and fell below $2,300, and XRP and SOL fell 5.94% and 6.73%, respectively.
This overall weakness shows that the decline in risk appetite in traditional financial markets has completely covered the independent market logic of the crypto market, and capital is being withdrawn from high-risk assets indiscriminately.
The deeper impact is reflected in the forced liquidation mechanism in the derivatives market. As of the morning of November 6, approximately $1.18 billion worth of digital asset derivatives market positions had been forcibly liquidated in the past 24 hours. It is worth noting that the closing amount of long positions used to bet on price increases was about US$913 million, accounting for about 90% of the total closing amount. This indicates that the market's previous crowded leveraged long trades have become the main victims of this sharp decline. Specifically, BTC had 254 million dollar positions closed, while ETH had 160 million dollars liquidated.
This large-scale bullish trampling not only amplified price fluctuations, but also further weakened the short-term rebound momentum of the market. Meanwhile, the Alternative.me Fear and Greed Index, which reflects investor sentiment, fell sharply by 22 points from 50 points the previous day to 28 points, officially entering the “fear” range, which means that market sentiment has clearly weakened from a neutral state.
In terms of sector rotation, the DePin (decentralized physical infrastructure) sector was the hardest hit, falling 7.31% in 24 hours. The sector was previously highly sought after as being viewed as a beneficiary of AI computing power infrastructure, but its valuation logic was challenged as market concerns about the cost pressure on AI infrastructure investment intensified. In terms of token performance, GRASS plummeted by 14.32%, while Filecoin and Render declined by 8.47% and 5.72%, respectively.
Although DePin aims to provide data storage and computing resources in a decentralized manner, which should theoretically be directly related to the development of AI, the current market is more concerned with capital expenditure reduction rather than long-term demand. Joshua Lim, head of the global market at FalconX, said that as the impact of the slowdown in data center construction became more and more obvious, there was new selling pressure in the market.
Additionally, the CeFi and Layer1 sectors also declined by 3.63% and 4.06%, respectively, indicating the widespread selling pressure. Following the collapse of traditional technology stocks, the crypto market once again verified its high correlation with traditional risk assets. The market may continue to fluctuate at a low level in the short term to absorb leverage risk.