The Great AI Unwind: What Happened After 138 Days of Gains

Not Even Warren Buffett Could Save It

The longest US stock rally in over a decade just collapsed. Bitcoin crashed 30%. And the “smart money” is quietly heading for the exits.

The 138-Day Dream That Ended

Global markets hit a wall on November 17th. The S&P 500 and Nasdaq broke below their 50-day moving average for the first time in 138 trading sessions—the longest rally since before the 2007 financial crisis.

This wasn’t just another dip. It marked a critical inflection point.

The 50-day moving average serves as a technical tripwire for institutional investors. When major indices fall through it after such an extended run, it signals one thing: capital flows are reversing.

Even Big Tech couldn’t escape the carnage. News of Warren Buffett buying billions in Google shares provided only temporary relief for Alphabet. Meanwhile, Nvidia, Meta, Amazon, AMD, Super Micro Computer, and Dell all tumbled in unison. Oracle and CoreWeave extended month-long declines.

The takeaway? Individual company news no longer matters. The entire sector is sinking together.

Markets are now reassessing the sustainability of the AI boom itself.

_{Source: WSJ}

Bitcoin’s Triple Failure

The crypto crash tells an even darker story.

Bitcoin plunged nearly 30% from its 2025 peak, briefly dipping below $90,000. But the real crisis isn’t the price—it’s the narrative collapse.

This year, Bitcoin failed on all three promises:

Growth asset? Underperformed utilities stocks
Inflation hedge? Gold crushed it
Portfolio diversifier? Moved in lockstep with tech

Gold—dismissed by crypto evangelists as a “relic”—delivered superior returns compared to Bitcoin, long-term Treasuries, and even the Nasdaq. More embarrassingly, Bitcoin’s volatility no longer translates to upside. It’s become a high-beta macro risk, not a hedge.

For fund managers who added crypto for diversification, the verdict is brutal: Bitcoin didn’t offset tariff losses or amplify recovery gains. It just added correlated risk.

_{Source: Bloomberg}

The October Wound That Won’t Heal

Why is crypto struggling? The answer lies in October’s “liquidation event.”

When $19 billion in leveraged positions evaporated on October 10th, it left structural damage. George Mandres of XBTO Trading put it bluntly: “The shock went deeper than the surface. Market makers and investors fundamentally changed their risk appetite.”

Order book depth—the volume available within 1% of mid-price—remains depressed. Translation: The professionals haven’t returned.

Timothy Misir of BRN Analytics notes that Bitcoin now exhibits “high-beta exposure to macro tightening” rather than independent movement. It’s become a leveraged risk-on trade, not a safe haven.

Options data from The Deribit (owned by Coinbase) prices Bitcoin’s chance of reclaiming its all-time high of $126,000 by year-end at under 5%. Traders are instead hedging for drops to $85,000 or lower.

_{Source: Kaiko}

Amazon’s Bond Debacle: A Warning Sign

The most alarming signal isn’t coming from crypto—it’s from credit markets.

On November 18th, Amazon issued $15 billion in bonds. Initial orders hit $80 billion. But when final pricing was revealed, 40% of orders vanished. Only $47 billion remained.

This is unprecedented for an investment-grade tech giant. Typical cancellation rates run around 20%. But Amazon wasn’t alone—three other bond deals showed similar patterns, and another investment-grade offering was pulled entirely.

Here’s why it matters:

Hyperscalers raised $121 billion through bonds this year—over 4x their five-year average of $28 billion annually. Since September alone, they’ve issued $81 billion.

Brian Wong of Capital Group frames the concern: “The scale of this year’s fundraising is different. Markets are now questioning who wins, who loses, and whether these investments will generate returns.”

All eyes turn to Nvidia. If its earnings disappoint, the entire $120 billion AI bond narrative could unravel.

_{Source: Bloomberg}

The Calm Before the Storm

On the surface, credit markets look fine. Investment-grade corporate spreads hover around 83 basis points—well below the 10-year average. But beneath that calm, warning lights are flashing.

CCC-rated junk bonds now yield 10.38%—the highest since late August. Risk premiums have widened at their fastest pace in three months.

Michael Kelly of PineBridge Investments warns: “Spreads are so tight that honestly, Wall Street isn’t paying attention.” The low premiums don’t reflect actual risk.

In leveraged loan markets, banks are struggling to sell M&A-related debt. Applied Digital’s $2.35 billion loan issued at 97 cents dropped to 94 cents before recovering to 96 cents.

The message is clear: Investors view M&A debt as increasingly risky. Companies want to lever up for acquisitions, but markets are demanding discounts.

As this pattern spreads, corporate M&A capacity shrinks and banks face mounting losses. Volatility is building beneath the surface.

The Fed’s Silence Creates Fear

The core issue? Directional uncertainty on interest rates.

The Fed is maintaining a hawkish stance due to sticky inflation and data gaps from the historic government shutdown. Markets expected liquidity to return. Instead, they’re getting extended tightness.

For investors positioned for lower rates and ample liquidity, this is devastating.

The butterfly effect is already visible:

Bitcoin ETF outflows accelerating
40% of corporate bond orders canceled
Leveraged loan sales failing

This isn’t isolated turbulence—it’s capital fleeing risk assets across the board. The problem? The exits are narrow.

Hyperscalers issued $81 billion in bonds since September alone—triple their historical pace. Just as banks grow concerned when consumers suddenly rack up credit card debt, markets now question whether AI infrastructure spending can generate sufficient returns.

Nvidia’s upcoming earnings aren’t just a quarterly report—they’re a litmus test for the entire AI investment cycle.

Survival Strategies for Uncertain Times

The real question investors face: Is AI investment like the 2000 dot-com bubble, or like the 1990s internet revolution’s early correction?

The answer determines everything. Here’s how to navigate:

1. Reduce Leverage Now

Cut exposure to highly leveraged or unproven assets first. Margin calls happen fast when liquidity dries up.

2. Revalidate Valuations

Assets priced for perfection leave no room for disappointment. Reassess whether current prices reflect actual risks.

3. Identify Structural Winners

AI transformation is real. The question isn’t “if” but “who.” Focus on companies with competitive moats and proven revenue generation.

4. Preserve Liquidity

Cash is your seatbelt in foggy conditions. A December Fed rate cut looks unlikely, but Fed signals could shift dynamics quickly.

The Bottom Line

The AI boom hit its first major stress test—and cracks are showing everywhere. From Bitcoin’s identity crisis to Amazon’s bond fiasco, from junk bond spikes to M&A market freezes, the signs point to one reality:

Capital is reassessing risk across the board.

The 138-day rally wasn’t built on unstable ground—it was built on expectations of continued liquidity and AI monetization. Now both assumptions are under scrutiny.

Whether this marks a healthy correction or the beginning of a broader unwind depends largely on one factor: what the Fed does next.

Until that clarity arrives, the smartest play might be the most boring one—holding cash and waiting for the fog to clear.

See more insightful news!