Bitcoin rebounded from roughly $75,600 and gold futures surged 3.4% to $4,061.10 on November 4, following the US elections, but a $378 million liquidation of bearish positions within a single hour raises questions about whether the move reflects genuine institutional appetite or merely forced covering.

Short positions accounted for 81% of the liquidations during that period, according to CoinGlass derivative data. Over the three trading sessions preceding the rebound, US spot Bitcoin ETFs had suffered $1.16 billion in withdrawals, suggesting weak momentum heading into the rally.

On November 4 itself, US spot Bitcoin ETFs attracted only $74.6 million in combined inflows. Fidelity’s FBTC fund received $236.7 million, while BlackRock’s IBIT lost $201.2 million, indicating fragmented institutional positioning. Bitfinex’s analysis found Bitcoin’s recent recoveries driven largely by short covering, with limited evidence of aggressive buying in the spot market.

Correlation Shift and Yield Decline

Bitcoin’s 90-day correlation with gold climbed above 0.50 in August 2026 from nearly zero earlier in the year, according to Grayscale. Bitwise confirmed that Bitcoin’s relationship with gold reached its strongest level since 2020. This marks a reversal from mid-year, when Bitcoin’s correlation with the Nasdaq-100 stood at 0.60 before declining to approximately 0.33 by August.

The rally coincided with a decline in US Treasury yields. The 10-year yield fell from 4.95% to 4.89%, while market expectations for inflation over the next year dropped from 2.4% to 2.1%. Lower bond yields make non-interest-bearing assets such as gold more attractive, while easing financial conditions can support speculative investments including Bitcoin. The S&P 500 jumped 1.6% and the Dow gained 3%.

Investors welcomed the prospect of reduced political uncertainty and constraints on Trump’s fiscal agenda. CoinShares research head James Butterfill suggested Bitcoin had already priced in much of the Democratic election victory, leaving room for recovery once political uncertainty faded.

Profitability Compression

Early October 2026 saw at least 97.5% of Bitcoin held by short-term investors in profit. By November 4, that figure had compressed to 38%, indicating substantial unrealized losses among recent buyers. Bitcoin’s average cost basis for active investors stood at $77,700, with additional support identified at $75,700. A sustained decline below $73,000 would threaten the August recovery.

Holders could recover initial investments in the $84,000 to $85,500 range, while $87,000 represents a significant concentration of potential short liquidations.

Fiscal Backdrop

The Congressional Budget Office projects the US federal deficit will reach $1.9 trillion in 2026 before expanding to $3.1 trillion by 2036, with publicly held debt rising to 120% of GDP. This fiscal trajectory underpins the debasement thesis linking Bitcoin and gold demand, though the November 4 rally provided limited evidence of fresh conviction on that trade.

A US employment report is scheduled for Friday following November 4.