Ivan on Tech analyzes the Bitcoin and AI stock selloff following a major market volatility spike
Solo market commentary from Ivan on Tech on a day of sharp declines across AI stocks and broader markets, with Bitcoin holding near its 200-week Moving Averages.
Summary
A dramatic single-day market event — AI stocks down 10–30%, the VIX spiking approximately 60–70% (one of only five or six such occurrences since 1990), and the NASDAQ posting its largest single-day drop in 19 months — forms the backdrop for this solo analysis. The host argues that historically, such extreme VIX spikes represent peak panic rather than the beginning of a prolonged crash, and presents statistical data showing strong positive NASDAQ returns in the 6–12 months following similar events: 86% probability of +27% over 12 months, 73% probability of +15% over 6 months, and 67% probability of +8% over one month (with the one-month outcome described as closer to a coin flip). He contrasts the situation of AI stocks — many of which are already down 38–70% from their highs — with Bitcoin, which he argues is the strongest risk-reward asset currently available due to its proximity to the 200-week moving average and its continued bull trend. He also draws an extended analogy between the AI selloff and prior crypto/commodity parabola blow-ups, discusses the Paraguay banking crisis and growing Tether demand, comments on leveraged fund blow-ups, Elizabeth Warren's return to the Senate Banking Committee, and Michael Saylor's MicroStrategy circular trading activity.
Key Takeaways
FULL TRANSCRIPT
Market Overview: A Historic Volatility Event
Bitcoin is back towards $76,000. Yesterday was a crazy day — this day is going to go down in history. Science is down 16%. All of the other AI names are down between 10 and 30%, all within one day. The VIX has shot up to historic levels. We have not seen anything like this basically since COVID. This is a very important historic event. Basically a black swan. When the VIX goes up like this — 60 to 70% in a session — it's really happening once every half decade.
The NASDAQ dropped 5.5%, the biggest one-day drop in 19 months. So what do we make out of all of this? Because Bitcoin also fell. Bitcoin was all the way at $80K yesterday and then dropped — now it's $76K, still within the bull trend.
Historical Data: What Normally Follows a Drop Like This
Looking at the numbers, looking at what normally follows after such a drop in the NASDAQ — it is what it is. Looking at historic returns, with 86% probability, 12 months after such a drop you have a nice +27% return in NASDAQ. Six months following such a drop, you have with 73% probability a +15% return. The more short-term, the less probability, but still above 50% — about 67% probability of +8% over one month. And at the one-month mark it's more like 50/50, basically like a coin flip on whether it's going to be bull or bear. But the longer the time horizon, the better it is for the bullish thesis.
The VIX Spike: Peak Panic Signal
The VIX is another metric which is very important to look at, because when the VIX goes up like this in a single session, this basically never happens. We have a few times per decade this happening — a 70% surge, the sixth time ever in history. And of course, what is the effect? You had the China spillover in 2007 — in a month, stocks were up; in three months, stocks were up; in 12 months, even higher. The conclusion is that this normally means peak panic. When the VIX goes up like this, it means big panic.
These vertical one-day spikes are extremely rare. Across the prior five or six cases since 1990, the pattern is consistent: the spike itself is usually the climax of panic, not the start of a crash. Once everyone has bought protection, the hedges eventually come off and that buying pressure lifts stocks. So basically, as soon as there's a bit of concern in the market, everyone starts hedging — that in itself means you sell a bit, you start hedging, you're diversifying, you're buying some insurance for your positions. Once that settles, you normally have in most cases a fantastic ride for the future.
Of course, there are exceptions. If this is like the dot-com crash, it's not going to be good. We have to monitor the S&P 500 carefully here because the S&P 500 is risking a bear trend.
S&P 500 vs. Bitcoin: Risk-Reward Comparison
Looking at the bearish side, the S&P 500 needs to come back up today. It has just one day to recover. Otherwise, we will have to be careful and de-risk from S&P 500, because there's no way the S&P 500 is going to go to Valhalla without first being in a bull trend.
For Bitcoin, it's very different. Bitcoin is close to the 200-week Moving Averages. For Bitcoin to reach it, it's just about 10% lower. The 200-week Moving Averages is the long-term support — it normally acts as a bottom. Yes, sometimes you can go below it, but you're never dumb buying at the 200-week Moving Averages. It's not a bad entry. You can be wrong if you buy some mega peak and it goes bear trend and you don't act on it — but the 200-week Moving Averages in core assets like S&P, NASDAQ, gold, and Bitcoin is the best long-term reference.
That's why the risk-reward for Bitcoin is so nice right now. You have cash obviously — you can just hold cash, hold a money market fund, get 4% in the US. That's one option if you want to be risk-off. But if you want to be in the market, what do you buy? Because the S&P is in a bear trend. Wherever you look, it's not looking too pretty — except Bitcoin. On the broad palette of assets, Bitcoin is the shining light. At least that's how I see it. We're so close to the 200-week Moving Averages, which makes it even more attractive. But not financial advice — you do you, I do me. This is education. I'm just a guy on the internet speaking about charts.
Markets can go very, very fast down. You can go to zero. You can lose everything in the markets if you're trading. You have money at risk and that means it can go down, maybe even to zero.
ETF Outflows and the "Normie" AI Trade
Looking at the ETF data — big fat outflow. No good news in the ETF. But looking at historic performance after such a drop, NASDAQ data is good, and the VIX spike also normally means peak panic.
Isn't it crazy — you remember just a few days ago we discussed that some guy tweeted, "Oh, I don't like crypto because I think AI is more exciting." Jason Calacanis was retweeting some guy that said, "Oh, I don't like crypto. I think Bitcoin is boring. I think AI is fun." This is the brain of the normie — you think something is fun, it's so exciting, all your friends are in. And this is what you're greeted with. Because why are all of your friends in? Because it's the freaking top. Everyone is in.
If there is good risk-reward and no one is there, no buyers, everyone has already sold — that's the best setup. And Bitcoin is fitting that very nicely. Once everyone is in, your friend is in, your grandma is in — there's not too much upside left.
This guy Matthew — he must have bought at the very peak. He said, "I sold all my Bitcoin. I bought AI because all of my friends are in AI and they're not enthusiastic about crypto." This was on November 2nd. Yesterday, November 5th, we saw Armageddon in AI. Just as these guys are coming into AI, joining their friends in this great AI trade — they get destroyed. Literally destroyed.
AI Stock Carnage: The Numbers
Look at some of these AI stocks. SanDisk is down 70% — and that's on the logarithmic chart. On the regular chart, the destruction is even more visible. Dave Lee — big shout out, he's probably good at investing in Tesla — but he also said on November 1st that Bitcoin is not interesting, that it used to be interesting four or five years ago but now it's boring, and that the things going on with AI are infinitely more interesting than Bitcoin. Fantastic. You're a genius.
AI — so interesting. Minus 65%. Intel — AI, so interesting. Minus 63%. Micron — the interest here is minus 50%. AMD — minus 38%. Even if you have a bit of a pump here, most of them are in bear trend. Nvidia also showed the warning signal going bear — and now how much? Down 25%.
Strategy: Bull Trend, Bear Trend, Stay the Course
So what do you make out of all of this? I think crypto is bullish. I know many people don't agree. Many people want to be a doomer. Good for you. This is my view. We've been bullish since this summer. AI bloodbath — normies were at the top because normies have no strategy. They see what their friends are doing. Normies think they have a strategy until the market punches them in the face.
When something is in a bull trend, you're bullish. When something is in a bear trend, you're bearish. We keep that strategy. Bitcoin is bullish, close to the 200-week Moving Averages. I'm bullish crypto. We stay bullish crypto until the facts change.
For Bitcoin, it's a conundrum — because you know that Bitcoin is good to buy if it is below or at the 200-week Moving Averages. Even if we go bear trend, it's still a good accumulation area. The only difference would be that you can remove leverage, you can be more risk-off. But even if we go bear trend on Bitcoin and it goes below the 200-week Moving Averages, it's going to be great anyway for long-term accumulation. Having both a bull trend and closeness to the 200-week Moving Averages means Bitcoin is the best right now. But manage risk, use your own brain. You could lose all your money. Bitcoin could go to zero. Not financial advice — only education and entertainment.
Gold, Silver, and Parabolas: A Pattern We Know in Crypto
You remember in January, what did we say about gold and silver? The latecomers were going to get wrecked. I remember tweeting clearly that the boomers were going to learn something about parabolas that we in crypto know all too well — and then gold and silver went bear trend and we were risk-off in time. AI is the same, because we in crypto know so many things about parabolas that the average player doesn't know. AI is experiencing for the first time exactly what crypto has experienced before.
Leveraged Funds and the Mechanics of the Selloff
Justin Leopold — I think his fund is now officially blown up. At least that's what people are saying online. This is the problem with leverage. The reason why everything is down so much is because Leopold and many other funds used leverage for this AI gambling. The way they trade AI stocks is gambling. They have leverage, they get a margin call, they need to sell. That's what caused the VIX spike — either the Leopold fund or someone else got blown up in their leveraged position. That's why it's best to not use leverage. It's best to just trade spot. Build up your confidence. Don't go leveraged because you can blow up your whole portfolio. You can go to zero. A margin call means you go to zero.
What's happening in stocks right now is crystal clear. According to Kobeissi, this is the product of record levels of leverage colliding with a sudden shift in market sentiment. What we're seeing now is a readjustment. Whoever needed to get liquidated — go liquidate. There is hedging now being bought and positioned into, and that's the reason for the volatility.
Political Landscape: Democrats, AI, and the Uni-Party
Moving to the political side of things — Democrats are back in power. People are saying they're going to wreck all AI, but in reality you already see now in Texas the Newsom-adjacent figure is now working with Elon Musk, and the relevant official is now open to allowing all of the AI data centers to finish — basically saying that if you already started, you can finish. Politicians and business always figure it out. Democrat, Republican — it's two buns of the same burger. It's the same. Republican is the same. It's theatrics for the play.
When Trump came into power, you remember how all the tech bros adapted their marketing to be kind of like Trump. Now you're going to see it in real time — these same people are going to adapt their marketing to the new political environment. It's the uni-party, but with different marketing.
And there's no right or left — there's only a $40 trillion-plus national debt and no one has a solution. So, Bitcoin is the solution.
Tech Layoffs and Productivity
Microsoft fired 30% of their staff. You see how the stock is very nice. If you hold Microsoft, it's very good. No need to snack on the shareholders' dime. AI doesn't need a snack — it answers fast. Microsoft is doing well.
And by the way, we discussed that it's very smart to buy Microsoft at the 200-week Moving Averages. Even when it was in a bear trend, we said it's cheap — and then it went up. Very nice. Just coming back to the discussion about Bitcoin at the 200-week Moving Averages: it's good. Even if it goes to the 200-week Moving Averages, even if it goes bear trend, it's still going to be smart to buy around that level because we're so close to it. Risk-reward for Bitcoin is the best.
Amazon did something similar with headcount cuts, though not as boldly handled. Microsoft is the better choice there.
Market Commentary Roundup
Meet Kevin is saying it's time to buy — index levels hit below RSI 30, 200-day Moving Averages, all kinds of signals. I actually agree. There's so much panic, it's likely going to be nice one month, six months, twelve months ahead.
Bitcoin fell less than NASDAQ — interesting. A bit of a safe haven. We still fell, but a bit of a safe haven. The stock market erased three Elons in terms of net worth. Nvidia erased all its stock market gains for the year. Bare trend — you've got to be careful.
Bob Lucas is saying this is going to be the bottom. The weekly cycle is in decline, and we're going to find some higher low.
Elizabeth Warren Returns to Senate Banking Committee
Elizabeth Warren is going to become chair of the Senate Banking Committee, giving her major power. We welcome Senator Warren back. It's going to be great. I actually missed Senator Warren a bit — you remember how many clips we had in 2021 and 2022, there was always something with her. The last two years it was nothing. So we actually welcome her back. Let's see what's going to happen. Business and politicians are going to figure themselves out.
Michael Saylor and MicroStrategy
Michael Saylor bought MicroStrategy back to $100. He pumped it up himself and now he can sell it again and buy Bitcoin. Basically, he buys Bitcoin expensive from the money he gets from MicroStrategy stock sales. Then he has to sell. As Ran summarized it nicely: you spend two billion buying back your own stock, you are the only buyer in the market, you sold MicroStrategy to buy Bitcoin, you sold the same Bitcoin lower to buy back MicroStrategy. But listen — it's a bull market. In a bull market, it's back to $100 and now he can sell it again if it goes above $100 and buy Bitcoin. Interesting circularity, but it's a bull market, so we don't over-analyze too much.
Banking Issues, Paraguay, and Tether
On the question of banking issues in Paraguay and whether they'll spread to other countries — banking issues are normally a problem if you have cash. If you have your money invested in stocks or ETFs, you normally don't care about banking issues because you are not part of the bankruptcy balance sheet. You remember what happened with Credit Suisse — they collapsed, but everything was just moved to UBS and that was it.
If you have a savings account where you get interest from the bank, you are exposed to their financial troubles. If they collapse, you could collapse with them. Instead, what you can do is buy a money market fund — then you are the owner of those shares and they are not part of any bankruptcy.
Can it spread to other countries? Paraguay is very small. It's not going to spread anywhere, most likely. And there's now growing demand for Tether as a result — good for crypto, good marketing for crypto. If you have Tether, you have no problem. If you have a bank account deposit, it's a problem.
Closing Outlook
We are keeping the strategy. We are bullish. Bitcoin is in a bull trend. We're bullish on whatever is in a bull trend. The S&P 500 is a bit problematic — it needs to close back above the key level. If you look at the futures, they need to close there. All in all, we are bullish in bull trend, bearish in bear trend. Bitcoin is the best risk-reward. See you all Monday.