Monday Market Brief: a midterm shock hits AI stocks and Bitcoin loses its 50-week average

Bitcoin closed the week at $74,968, down 4.2%, and 0.7% below its 50-week average near $75,500, which ended a run of seven weekly closes above that line. It had jumped above $80,000 on Wednesday, with a high near $81,100, as the midterm results came in, and then gave it all back. Sunday's low of $73,708 was its weakest level since August, and Ether fell to about $2,100.

For asset managers, portfolio managers and digital asset desks, the weekly close is the signal. In last week's brief, we flagged the 50-week average as the line the trend depended on, and a daily close below it as the risk. Bitcoin lost it on a weekly close, which is the more telling test, and it now trades below $75,000.

A midterm whipsaw ends in forced selling

Wednesday's spike was a short squeeze. More than $560 million of shorts were liquidated, and the week's only ETF inflow, $74.6 million, came that day. Thursday reversed it. Bitcoin fell about 5% below $76,000 as stocks crashed, and $1.12 billion of longs were liquidated against $133.21 million of shorts, according to CoinGlass and exchange data.

Sunday repeated the pattern. Another $781.4 million of longs went against $83 million of shorts while equity markets were closed. That is more than $1.9 billion of longs in four days.

ETF outflows erase the year's gains

ETFs sold along with the market. US spot Bitcoin ETFs lost $1.28 billion on the week (SoSoValue and Farside data), the most since June, and BlackRock's IBIT accounted for about $1.21 billion of it. Outflows came on four of five days: $398.6 million on Monday, $115.6 million on Tuesday, $430.2 million on Thursday and $411.9 million on Friday.

That pushed year-to-date flows negative, at about $914 million of net outflows. Fidelity's FBTC was the exception, taking in $93.1 million net, so the selling came mainly from IBIT. Ether funds lost $360.58 million, a sixth straight week of outflows, and total crypto ETF outflows reached $1.672 billion.

Why it matters: investors are leaving AI risk, and crypto follows

Democrats' sweep hits AI names

The Nasdaq Composite fell 5.52% on Thursday, its worst session since April 2025, and entered a correction. The S&P 500 lost 4.36%. Coverage tied the move to the Democratic sweep and its possible effect on AI regulation and data-center projects, with a weak Qualcomm forecast adding to it. Nvidia fell 9.3% and the Philadelphia Semiconductor Index more than 12%. Friday brought a bounce, with the S&P 500 up 0.3% and the Nasdaq Composite up 1.1%, but the week still ended 2.7% and 3.4% lower.

The Nasdaq-100 fell about 4.9% on the week. Micron fell 17.5% on Thursday after Bloomberg reported it had paused a $4.5 billion memory plant in Taiwan, and Oracle lost 6.9% before slipping another 4% on reports that Microsoft is scaling back an AI computing lease. AMD, by contrast, rose 11% on Friday after record quarterly revenue and a fourth-quarter outlook above consensus.

Defensives hold, energy breaks

Money moved to sectors with steadier cash flows. Consumer staples gained about 1.0% on the week and financials 1.1%, while the S&P 500 fell 2.7%. Energy was the exception, down about 12% as Brent settled at $98.32. That was a weekly fall of 13% to 16% depending on the contract, the steepest since 2020, on Iran de-escalation hopes and the election result. Gold rebounded to about $4,070, up roughly 5%.

A strong jobs report keeps a December hike in play

Payrolls rose 165,000 in October against about 65,000 expected, unemployment fell to 4.1% and average hourly earnings rose 3.1% year on year. Markets now put the odds of a December hike at 77% to 81%, though the decision remains data-dependent. The 10-year yield ended the week at 4.87%. Challenger counted 43,994 announced job cuts, the lowest October since 2023, so the layoff wave we expected has not shown up yet.

Crypto trades as the tail of the Nasdaq

Bitcoin rallied with stocks on Wednesday, fell about 5% on Thursday as they crashed, and slid again on Sunday. It remains a high-beta tail of the Nasdaq, and with ETFs selling, no demand cushioned the move. The link can loosen quickly if ETF flows reverse or equity volatility declines.

The Big Whale's take

Last week's call held on equities and Bitcoin

Last week we argued that equities were correcting because AI debt looked harder to finance, and that the 50-week average was the line for Bitcoin. Both held. We were wrong on the macro supports: the labor market did not weaken and oil did not stay high, with Brent down 13% to 16% in a week. The AI financing worry moved prices, and the macro data did not.

Price drives through the longs

Last week the map showed about $1 billion of shorts above price and $850 million of longs below. Price took the shorts on Wednesday and then drove through the longs on Thursday and Sunday. The weekly close below the 50-week average makes this a directional move.

Levels to watch

With Bitcoin near $74,500 on 9 November, CoinAnk's three-day liquidation heatmap puts the strongest nearby cluster below price at $72,850 to $73,250, where longs would be forced out. Above price, short clusters sit at $76,250 to $76,550 and $76,850 to $77,200.

The 50-week average near $75,500 is the level to reclaim. Below the heatmap range, the 200-week average near $67,500 and the June low near $58,000 are the next supports. A heatmap is an estimate and does not guarantee that price will reach these zones.

What we expect next

Three dates set the path: October CPI tomorrow, Nvidia on 17 November after the close, and the FOMC on 8 and 9 December.

Base case: The AI financing concern persists but does not turn into a full unwind. Equities stay heavy with defensives leading, and an in-line Nvidia report leaves the question open. ETF flows remain soft and Bitcoin stays below its 50-week average.

Bear case: A Nvidia miss, which the market reads as the benchmark for AI demand, triggers further de-risking. The Nasdaq, already in a correction, expands toward a drawdown of 25% to 30% or more from its record, and the S&P 500 sees a 15% to 20% correction. Bitcoin tests the 200-week average first and risks revisiting the June low by year-end.

Repair case: October CPI comes in cool, Nvidia beats and ETF inflows return. A weekly close back above the 50-week average near $75,500 would be the first clear signal that the break is failing, and it would invalidate the bearish read.

For professional clients only. Not investment advice. Past performance is not indicative of future results.