Bitcoin clings to 76K support as $2 trillion AI selloff hits stocks post-midterms

A blue wave meets a tech-stock rout

Ryan and David open on the midterm results: Democrats won a "full sweep" of the Senate and House, which Ryan calls a "blue wave," even "blue tsunami" by some accounts. Markets initially rallied after the results but reversed hard by Thursday morning, with the S&P 500 erasing roughly $2 trillion in market cap in the first 40 minutes of trading. David says the S&P was down 4% over a day and a half, back to June 2026 levels, while the Nasdaq fell 6%, back to April 2026 prices.

The damage concentrated in AI infrastructure names: Micron down 14% on the day and 45% from all-time highs, Intel down 7% and 61% off its highs, Nvidia down 8.6%. By contrast, AI spenders like Amazon, Google and Apple held up comparatively well. David says it's "still too early" to call this an AI bubble popping outright, though Ryan notes some assets like Tesla and Trump-linked tokens fell specifically on the Democratic sweep.

Bitcoin dropped to a new local low before recovering to around 76,000, hugging its 50-week moving average. Ryan says this line has held through previous "early bull cycle" periods and views the bounce as bullish, while flagging that a break below could mean further downside.

Will Democrats come for crypto?

With Elizabeth Warren set to lead Senate Banking and Maxine Waters back on House Financial Services, the hosts debate whether a Democrat-controlled Congress will target crypto. David argues the party is more likely to pursue "retribution" against Trump's crypto ties than to attack the industry broadly: He expects a possible revisiting of the Clarity Act around bank stablecoin yield rather than a broad crackdown.

Ryan is less certain Warren has "learned her lesson," but agrees Democrats likely have "bigger fish to fry," joking she may instead build an "anti-data-center army." Both note early signals, including Maxine Waters' proposed "Crypto Investor Bill of Rights" (24-hour withdrawals, segregated customer assets, proof of reserves), look relatively mild. The hosts frame scrutiny of Trump-linked tokens as a welcome "exorcism" for the industry, provided the SEC and CFTC under Paul Atkins and Mike Celig are left alone.

The $6 billion Binance hack

The FBI attributed the theft of over $6 billion from Binance to North Korea's Lazarus Group. Roughly $2.85 billion was frozen, including $1.77 billion in Tether, $8.825 million in USDC, and smaller amounts frozen by Ripple and Arbitrum. The attack began with a fake job interview: a Binance employee downloaded malware disguised as a coding test, which spread across the network and ultimately reached machines holding private keys, exploiting Ethereum's EIP-7702 feature to approve unauthorized transactions.

Binance pledged to cover the full $6 billion loss and published proof of reserves, a response the hosts credit for limiting Bitcoin's drop to roughly 3-4% rather than a feared 20%. David contrasts this with FTX: "Binance was like an upstanding valuable business that had cash on hand."

Laundering routed partly through ThorChain, prompting an FBI alert naming its node operators directly. The hosts are puzzled no ThorChain operators have faced consequences, with Ryan joking the FBI or CIA may be running nodes themselves. Separately, hackers tried bribing Polygon validators with a 20k fee to unfreeze stolen funds; no validator has taken the bribe so far, and Polygon has proposed a hard fork to roll back and delete the stolen funds.

A French bank robbed using crypto as the getaway

David recounts how Crédit Mutuel, a roughly $200 billion French bank with 5.5 million customers, lost an estimated $130 million after hackers breached a third-party vendor system and pushed fiat through "mule accounts" at other banks, then on to exchanges including Kraken, Crypto.com and OKX, converting into stablecoins and disappearing on-chain. On-chain analyst Zach XBT flagged the suspicious activity around $106 million before the bank itself fully reported it.

Ryan frames this as evidence the "banks don't have that problem" narrative is false:

"That's no longer the case anymore apparently according to this one single story." — Ryan

Both hosts suggest crypto's bearer-asset security practices may already be a "generation ahead" of traditional banks' defenses against this kind of attack.

Ethereum's Devcon: quantum deadlines and a divisive keynote

At Devcon 8 in Mumbai, Justin Drake announced moving up Ethereum's post-quantum transition target to December 2028, covering execution, consensus and data layers, citing quantum computing and AI-driven cryptographic breakthroughs as risks. David calls this "the most bullish thing" to come out of the event, though notes it remains a 24-month execution challenge.

Separately, Gnosis presented progress on the "Ethereum economic zone" concept, letting L2s tap Ethereum mainnet liquidity, with Gnosis chain aiming to launch as the first such rollup by spring. L2Beat also rebranded to ETHBeat, widening its mandate to track Ethereum-related intermediaries beyond just L2s.

Vitalik Buterin's keynote drew criticism for barely mentioning Ethereum or DeFi, focusing instead on topics like private communications and data rights. Paradigm's Georgios criticized it publicly, asking "Where's the accountability?" David offers a more measured read, saying Vitalik has been focused on adjacent technologies since 2023 rather than Ethereum specifically, while agreeing it signals a shift in his role within the ecosystem.

Coinbase earnings and insider selling

Coinbase reported trading revenue of $590 million, flat quarter-over-quarter, with prediction markets revenue offsetting a 10% drop in spot volume; consumer spot volume is down 60% year-over-year. Subscriptions and services now make up 49% of net revenue, including $37 million in stablecoin revenue.

The bigger story for David is a new 10b5-1 filing allowing CEO Brian Armstrong to sell up to 24% of his shares (3% of total supply) at specific price targets, alongside similar plans for Fred Ehrsam and Emily Choi. David compares this to Robinhood's Vlad Tenev, who can sell 4% of his shares versus Armstrong's 24%, calling the scale of Armstrong's plan "a downer" for investors given Coinbase stock sits near a 970-day low.

Strategy's STRC note returns to par

The hosts briefly note that Strategy's STRC preferred note hit $100 for the first time in 174 days, which would let Michael Saylor use the ATM facility again, though it had slipped back to around $98-99 amid the broader selloff. They flag unspecified debt coming due for Strategy over the next six to nine months, tied to MSTR's price relative to convertible note thresholds, as a looming issue.