The SPDR S&P 500 Trust (SPY) ETF has continued to shed assets this year, making it the worst-performing in Wall Street. It has lost over $32 billion in assets, while the Vanguard S&P 500 (VOO) has added over $86 billion. BlackRock’s IVV ETF has added over $28 billion in assets. 

SPY ETF has been overtaken by IVV and VOO

The ongoing SPY ETF outflows have jumped this year and have made it the third-biggest fund in Wall Street. It now has $677 billion in assets, while VOO and IVV have over $762 billion and $701 billion, respectively.

The main reason why SPY has been dethroned is that investors are preferring the cheaper funds. SPY has an expense ratio of 0.09%, meaning that a $100,000 investment will cost just $90 a year in fees.

On the other hand, a similar investment in VOO and IVV will only cost about $30 each. While a $60 difference for a fund with $100,000 in assets is a small one, investors don’t see the need to pay more. They are likely following Morningstar’s advice when it wrote:

“When it comes to fees, VOO charges 0.03%, while SPY charges 0.0945%. The difference may be minimal, but there’s no reason to leave cash on the table. With all else equal, the fund with the lower fee is more aligned with investors’ best interests.”

Another minor reason why investors are dumping the SPY ETF and moving to the VOO and IVV is that the former was launched as a unit investment trust. 

This approach means that managers are prohibited from some basic operations like reinvesting dividends and also use derivatives to equitize cash. As such, investors are opting for the other funds to avoid SPY’s inefficiencies.

The SPY has also shed assets because of the Morningstar rating. While it tracks the S&P 500 Index, the company has given it a silver rating, while IVV and VOO are gold-rated.

S&P 500 Index ETFs have a major risk ahead 

The top S&P 500 Index ETFs have had a strong performance in the past few years as investors have flocked to technology companies like NVIDIA, Broadcom, and Microsoft. 

Therefore, there are concerns that these ETFs may crash once the so-called AI bubble pops in the coming months.

Some analysts and investors have started to warn that the AI industry is in a major bubble that could pop. One major issue is that OpenAI is driving the bubble through its circular investment deals.

For example, the company announced a major deal with AMD this week. As part of the deal, the company will take a stake in AMD, which will then supply thousands of GPUs to fund its operations. 

The company also announced a major $100 billion deal with Nvidia, where it will purchase thousands of GPUs from the company. As such, these deals are likely creating an illusion of demand, where there is none.

Most importantly, OpenAI has now announced deals worth over $1 trillion, funds that it does not have. Also, it is unclear how the company plans to monetize and achieve a return on investment in the near and long time. 

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The Shopify stock price has been in a strong uptrend this year as technology companies soared. SHOP jumped from a low of $69.34 in April to a high of $169.50. This surge has brought its market capitalization to over $213 billion, making it one of the biggest companies in Canada. So, is the highly overvalued company a good investment today?

Shopify stock has jumped as its growth continued

Shopify is a top company that provides e-commerce solutions to retailers and firms in other industries globally. Its main service is a platform that enables users to build e-commerce websites without doing any coding. 

Shopify has gained a substantial market share in the past few years because of the quality of its platform. It also offers more features that other website builders don’t have. 

The company’s business has been in a growth trajectory in the past few years. Its annual revenue jumped from $2.9 billion in 2020 to over $10 billion in the trailing twelve months. 

Most of this growth happened as it continued adding more users to its platform. It also launched more solutions, which helped it to upsell other companies from around the world.

Read more: Shopify shares rise 4% after TD Cowen increases target price

The most recent results showed that the company’s growth trajectory accelerated despite Donald Trump’s tariffs. Its gross merchandise volume jumped from $67 billion to $87 billion in the second quarter of this year.

The quarterly revenue rose by 31% to $2.6 billion, while the operating profit rose to $291 million. Most notably, the company boosted its forward guidance, noting that its revenue would grow at mid-to-high twenties.

Wall Street analysts believe that the company’s third-quarter revenue will be $2.75 billion, up by 27.4% from the same period last year. Its annual revenue is expected to be $11.27 billion, up by 26% from last year.

Valuation concerns remain

The main concern with the Shopify stock is that its stock has always been highly overvalued compared to other technology companies. 

Data compiled by SeekingApha shows that it has a forward price-to-earnings ratio of 92, higher than the sector median of 32. Its trailing multiple is 187, also higher than the industry median of 33. On a non-GAAP basis, the company has a forward multiple of 113 and a long-term multiple of 126. 

These numbers mean that an investor who bought the whole company would take many years to break even, 

However, many investors use the rule-of-40 multiple to value the company. In this, they look at its revenue growth and compare it with the margins. 

Shopify has a forward revenue growth of 25% and a profit margin of 23%, giving it a multiple of 48%, making it a relatively cheap company to buy. 

Also, it is worth noting that Shopify has perennially been an overvalued company.

Shopify stock price analysis

SHOP stock chart | Source: TradingView

The daily timeframe chart shows that the SHOP stock price has been in a strong rally in the past few months. It has jumped from a low of $69 to $169 earlier this month. 

The stock then pulled back and is now trading at $160. It remains above the 50-day and 100-day Exponential Moving Averages (EMA).

Therefore, the stock will likely bounce back as traders wait for the upcoming earnings. If this happens, it will rebound and potentially hit the important milestone at $200.

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The relentless US Dollar Index (DXY) sell-off experienced earlier this year has faded, and many hedge funds are betting in its comeback in the fourth quarter. The DXY Index was trading at $98.7 on Thursday morning, up from the year-to-date low of $96.24. 

Why the US Dollar Index has plunged this year 

The US Dollar Index has been in a strong downward trend this year. After peaking at $110 earlier this year, the index plunged to a low of $96.22.

This plunge happened after Donald Trump was inaugurated as the US president earlier this year. In interviews, he mentioned that the strong dollar was affecting the economy and suggested that he favored it to be weak, a move that would benefit exporters.

Some of Trump’s policies have led to a weaker US Dollar Index. For example, he has considered firing Jerome Powell from his position as the Federal Reserve chairman. He also recently fired Lisa Cook, a process that is currently in the court system.

The lack of Fed independence would have a negative impact on the US Dollar. A good example of this is the Turkish lira, which has been in a relentless sell-off for decades because of Erdogan’s power in firing and appointing the head of the CBRT.

The US Dollar Index also plunged as central banks moved to other assets. A good example of this is gold, which has been in a relentless bull run such that it has crossed the important resistance level at $4,000 this week.

The DXY index also plunged after Trump implemented substantial tariffs against other countries. It has dropped by nearly 6% after Donald Trump’s Liberation Day tariffs in April this year. 

Most recently, it dropped after the Federal Reserve slashed interest rates in the last meeting. It cut rates by 0.25% in the last meeting.

Why the DXY Index may rebound soon

The DXY Index may rebound soon for two main reasons. First, the options market shows that hedge funds are favoring the dollar as they bet that the ongoing rebound against most peers will extend into the end of the year. 

For example, the EUR/USD put options expiring by the end of the year, which rise in value when the currency falls, have had three times more volumes than calls in the past few days. The same view has happened on other currencies like the sterling, the New Zealand dollar, and the Australian dollar. In a recent note, an analyst said:

“Most of the dollar call buying has been in the G-10 majors and the jumps in front-end risk reversals in these currencies are a good indicator of the turn in demand.”

The daily timeframe chart shows that the US Dollar Index has formed a double-bottom pattern at $96.41 and has rebounded to the current $98.72. A double-bottom is a highly common bullish reversal pattern in technical analysis. 

The index has also jumped above the 50-day Exponential Moving Average (EMA), while the Relative Strength Index (RSI) has pointed upwards. 

Therefore, the most likely scenario is where the index continues rising a bulls target the key resistance at $100.16, the highest point in August. This price coincides with the neckline of the double-bottom pattern and the lowest point in September. 

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The Nikkei 225 Index continued its strong rally this week as foreign investors continued buying and the Japanese yen plunged to its lowest level in weeks. It jumped to a high of ¥48,465, up by over 57% from the lowest level this year. 

Foreign investors are buying Japan stocks

The Nikkei Index and other Japanese indices, like the Topix have been in a strong uptrend this year. One reason for this is that foreign investors have continued buying these shares.

Data released on Thursday showed that these investors bought shares worth over ¥2.46 trillion, which is equivalent to $16.3 billion. These purchases happened after the victory of Sanae Takaichi, who has favored Abenomics-like policies.

Most notably, inflows into Japanese stocks happened after three weeks of intensive selling as investors anticipated that a more hawkish official would win the seat. 

The ongoing Nikkei 225 Index jump is being led by companies in the defense and technology industries. Some of the most notable gainers are companies like Mitsubishi Heavy, Japan Steel Works, and IHI Corp. Technology companies like those in the semiconductor industry have also had substantial inflows.

Foreign investors have been buying Japanese stocks in the past few year after Warren Buffett moved into the market. He invested in five trading houses – Mitsui, Itochu, Mitsubishi, Sumitomo, and Marubeni – during the pandemic and then added to their position. 

Japanese yen crash continues

The Nikkei 225 Index has also jumped as investors reacted to the relatively weak Japanese yen. Data shows that the USD/JPY exchange rate has soared from a low of 139.95 in May this year to the current 152.50, its highest point since February. 

The Japanese yen has slumped partly because of the ongoing US dollar rebound. It also plunged as investors reacted to Takaichi’s victory, which they believe will lead to more stimulus and an easy-money policy. 

The yen slump coincided with the soaring Japanese bond yields. Data shows that the 30-year rose to 3.30%, while the ten-year jumped to 1.70%. 

Looking ahead, the next major catalyst for the Nikkei 225 Index will be the earnings season. Fast Retailing and Seven & I Holdings have already published their earnings. 

Later this month, companies like Hitachi, Chugai Pharma, Fujitsu, Canon, and Tokyo Gas will publish their financial results.

Nikkei 225 Index technical analysis

The daily timeline chart shows that the Nikkei Index has been in a strong bull run in the past few months. It has jumped from a low of ¥30,690 on April 7 to the current ¥48,403.

The index has jumped above the important resistance level at ¥40,227, the highest point in October and November last year. It was also the highest level in January. 

The Nikkei 225 Index has remained above the 50-day and 100-day Exponential Moving Averages (EMA). Also, top oscillators like the Relative Strength Index (RSI) and the MACD have continued rising.

The RSI has formed a broadening wedge pattern. Therefore, the index will likely continue rising as bulls target the key resistance at ¥50,000. 

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The FTSE 100 Index is in a relentless bull run and is now hovering at its all-time high. It soared to a high of £9,575 on Wednesday, Oct. 8, up by over 26% from its lowest level in April. This article explores the top FTSE 100 shares that are driving the ongoing bull run. 

Fresnillo is the top FTSE 100 stock this year

The Fresnillo share price has been in a strong bull run this year and is now trading at its all-time high. It jumped to a high of £2,370, up by 310% from its lowest level this year. This rally has brought its market capitalization to over £17 billion.

The company’s stock has been driven by the ongoing silver price surge. Silver soared to nearly $50, making it one of the top gainers in the metals industry. Its surge helped to boost its financial performance, with the adjusted revenue in the first lf jumping by 27% to $1.98 billion.

The soaring revenue coincided with lower production costs, which fell by 20% to $673 million, helped by the Mexican peso crash. As a result, the profit jumped by 297% to $467 million. 

Therefore, the company will likely report strong results in the coming months now that silver has continued doing well. 

Rolls-Royce share price is at a record high

Meanwhile, the Rolls-Royce stock price has jumped by over 102% this year and is now at its all-time high. This jump has brought its market capitalization to over £100 billion, making it the biggest industrial company in Europe.

The company has done well in the past few years, helped by the ongoing recovery in its key industries like civil aviation, energy, and defense. Its power business has been boosted by the ongoing demand jump in data centers.

Also, the company’s civil aviation business is doing well now that flying has fully recovered from the pandemic. Additionally, the company is benefiting from the ongoing defense spending in Europe and the United States. This spending has also benefited other FTSE 100 defense companies like Babcock International and BAE Systems.

Most importantly, its Small Modular Reactor (SMR) business is doing well after it was selected by the UK government. Analysts believe that the business will continue doing well as they compare it with Oklo, the company backed by Sam Altman.

Lloyds, Barclays, Natwest, and Standard Chartered 

UK bank stocks have done well in the past few months. Lloyds share price, has soared 60% this year, while Standard Chartered, Barclays, Natwest, and HSBC have soared by over 37% this year.

UK banks have surged this year, a move that has coincided with the performance of other European banks like Commerzbank, Deutsche Bank, and Unicredit.

The banks have done well because as they continue to benefit from the relatively high interest rates by the Bank of England (BoE). 

The bank has delivered two cuts, one in February and another in August, bringing the benchmark rate to 4%. Analysts expect the bank will maintain rates at the current rates now that the country’s inflation has remained at an elevated level.

The other top companies in the FTSE 100 Index are Endeavor Mining, Airtel Africa, Antofagasta, Prudential, St. James Place, and Aviva.

Most recently, some of the top companies that have done well are the likes of Anglo American, which recently announced its purchase of Teck Resources, Rentokil, AstraZeneca, and Melrose Industries.

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Porsche share price has been in a strong bearish downtrend this year and is hovering near its all-time low as demand worsens. It has moved to €42.7, a few points above the record low of €38.42. This sell-off could continue as its Chinese sales slump. 

Porsche share price at risk as Chinese sales slump

Porsche, one of the biggest companies in the biggest luxury car market, is facing major headwinds as its sales in its key markets tumble.

In a statement on Thursday, the company noted that its sales in China tumbled by 21% in the third quarter as luxury car demand waned and as Chinese opted for local vehicles by companies like Nio, Xpeng, and Xiaomi

As a result, its deliveries dropped by 5.7% in the quarter to 66,000 vehicles. This crash mirrored the performance of other German vehicles like Mercedes-Benz and BMW.

Porsche has also continued to struggle in Europe, where demand for vehicles has stalled and where Chinese brands like BYD and Nio have started to gain market share.

Most importantly, the company’s business in the United States has deteriorated, a trend that may continue after Donald Trump added tariffs on European vehicles. Porsche is more exposed to these tariffs because, unlike BMW and Mercedes, it has no manufacturing plants in the US. This explains why the company has slashed its guidance four times this year.

Porsche’s profitability is in trouble

The most recent results showed that Porsche’s business continued to deteriorate in the first half of the year. Its sales dropped to €18.15 billion in the year’s first half from the €19.4 billion in the same period last year. This revenue happened as the company sold 146k vehicles, down from the previous 155k.

Most importantly, the company’s profitability continued to crash in the year’s first half dropped to €718 million from €2.15 billion in the same period last year.

Porsche is taking action to remedy the ongoing slump. For example, it is slowing the rollout of electric vehicles and is focusing mostly on internal combustion engine (ICE) vehicles. For example, the new Cayenne, which was initially expected to be an EV, will initially be offered as an ICE vehicle.

Also, the existing combustion engine models will remain available for longer, with the company planning to rollout successor models for the coming years.

Additionally, Porsche noted that it would reschedule the development of new platforms for electric vehicles. The impact of all this is that the management expects that it will report substantially higher losses in terms of depreciation in the near term.

Porsche’s change of tune is an admission that the EV strategy that it launched a few years ago is not working. While its initial Porsche Taycan had strong sales initially, the trajectory faded as these vehicles experienced substantial depreciation.

Porsche stock price analysis 

The daily timeframe chart shows that the Porsche stock price attempted to recover a few months ago and then found substantial resistance at €47.72 in July.

It has now plunged and moved below the 50-day and 100-day Exponential Moving Averages (EMA). It is nearing the important support level at €38.42, its lowest level in April this year.

The stock has also formed a small rising wedge pattern, which is a common bearish reversal pattern.

Therefore, the stock will likely have a strong bearish breakout in the coming weeks, with the next target to watch being at €38.42, its lowest level in April.

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The Japanese yen continued its strong plunge this week as investors braced for a return of Abenomics. The USD/JPY exchange rate rose to 153, its highest point since February 13, and up by about 10% from its lowest level this year. 

Why the Japanese yen is crashing

The USD/JPY pair surged this week as investors reacted to the ongoing US dollar rebound. The US Dollar Index has jumped in the past few weeks, moving from the year-to-date low of $96 to $98 today, with traders in the options market expecting it to continue the uptrend.

Technical analysis also suggests that the DXY Index will bounce back in the coming weeks as it has formed a double-bottom pattern,..which often leads to more upside over time.

The Japanese yen has also plunged as investors prepare for Abenomics-like policies now that Sanae Takaichi has won the leadership of her part, setting her up for the premiership.

Takaichi is viewed as being more friendly to the stock market and bad for the Japanese yen because she favors more spending, stimulus measures, and low interest rates.

Her policy proposals are significantly different from what the Bank of Japan (BoJ) is doing. It started hiking interest rates last year, moving them from the negative level to the current 0.50%. Officials have maintained their openness to hiking further this year or in 2026.

They have pointed to the current state of inflation, which has constantly remained above the 2% target this year. On the negative side, Japan’s inflation will likely remain under pressure now that the yen has crashed, which will make it more expensive to import energy. 

The Japanese yen has plunged as investors continue to question the BoJ’s independence, especially when it continues its delay in raising interest rates. However, a Bloomberg analyst noted that the bank will likely hike rates to remove the notion that it is not independent. He said: 

“Markets could start questioning the BOJ’s independence if it hesitates to raise rates. Amid the delicate balance between politics and central banking, it remains plausible the BOJ will continue with its tightening stance.”

USD/JPY forecast 

USDJPY technical chart | Source: TradingView

The USD/JPY exchange rate has been in a strong uptrend in the past few weeks and is now hovering near its highest level since February.

It is common for assets to either jump or crash after an election as investors anticipate the new policies. For example, most clean energy stocks plunged after Donald Trump won in the last election.

In most cases, this performance is usually a knee-jerk reaction as assets then adjust to the new normal.

The daily timeframe chart shows that the USD/JPY exchange rate surged after Takaichi’s victory. It has moved above the important resistance level at 150 and also formed a golden cross pattern as the 50-day and 200-day Exponential Moving Averages (EMA) have crossed each other.

Therefore, the most likely scenario is where the USD to JPY exchange rate pulls back and retests the support level at 150. 

This price action is known as a break-and-retest, and is one of the most common bullish continuation sign in technical analysis. If it happens, it will likely drop and retest the support at 150.92.

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The South African rand, often seen as a bellwether for the emerging market currencies, has soared to the highest point since September last year. The USD/ZAR exchange rate has soared to a low of 17.14, down by over 14% from its highest point this year.

Why the South African rand has soared.

The South African rand has been in a strong rally this year, becoming one of the best-performing currencies in the emerging and developed markets. 

It has soared even after the ongoing skirmish between the United States and South Africa. Trump has implemented a 30% blanket tariff on goods from South Africa.

The deal affected goods worth over $26 billion. South Africa exported goods worth over $10 billion, most of them which are gold, platinum, and vehicles. 

The South African rand has jumped because of the ongoing performance of the commodities market. Gold price has jumped to over $4,000, while other commodities like silver, platinum, and palladium have all jumped by double digits this year.

Gold price has jumped to $4,000, while platinum rose to $1,672. Palladium, another top South African export, has jumped to almost $1,500. The ongoing commodity market rally has helped to boost South African exports.

The USD/ZAR exchange rate has also plunged because of the recent US dollar index crash. It dropped to below $100 from the year-to-date high of $110. 

The pair has also moved downward because of the ongoing carry trade between the US and South Africa. The Federal Reserve has slashed interest rates to between 4% and 4.25%. On the other hand, the South African Reserve Bank (SARB) has moved rates to about 7%. Therefore, investors are borrowing the US dollar and investing in South African assets. 

Meanwhile, the South African rand has jumped because of the ongoing political stability in the country. 

The deal between the Africa National Congress (ANC) and the Democratic Alliance (DA) has held steady. This stability has helped to stabilize the economy and reduce inflation. The head of the SARB said:

“Sustained low inflation brings about lower and stable interest rates, which is good for investment, employment and growth.”

USD/ZAR technical analysis

USDZAR chart | Source: TradingView

The daily timeframe chart shows that the USD/ZAR exchange rate has been in a strong bearish trend. It has moved from a high of 19.92earlier this year and is now at 17.10. 

The pair has moved below the important support level at 17.43, its lowest level in July and August. Also, the Relative Strength Index (RSI) and the MACD have continued falling.

Therefore, the pair will likely continue falling as sellers target the next key support level at 17, followed by the psychological level at 16. A move above the resistance at 17.43 will invalidate the bearish outlook and point to more in the near term.

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The PayPal stock price rebounded this week, continuing a trend that started late September when it was trading at $65.30. This rebound happened as the company’s stablecoin growth continued and as investors bought the recent dip. 

PayPal USD (PYUSD) stablecoin growth 

One of the top reasons why the PayPal stock price is soaring is that the company is becoming a major player in the stablecoin industry.

Data compiled by Artemis shows that the PYUSD stablecoin supply continues to rise this month. The supply jumped by 113% in the last 30 days to over $2.5 billion.

The surge led to a 150% increase in stablecoin transactions, which jumped to 1.8 million. Also, the adjusted PYUSD transaction volume rose by 7,000% to over $17 billion. This performance makes it one of the fastest-growing players in the stablecoin industry, especially after the recent partnerships with Aptos and Spark.

PayPal aims to benefit from the PYUSD growth in several ways. First, it hopes that the stablecoin will provide it with a high-margin revenue over time.

Stablecoins make money in a way similar to banks. They normally take customer deposits and invests them in government bonds and then take all the interest.

The only difference with banks is that the GENIUS Act has limited them to how they can invest customer deposits. Banks, on the other hand, are usually free to invest the funds in assets that generates substantial returns.

The other difference is that stablecoin companies don’t have to share the interest income with the holders, meaning that they keep all the interest.

How PYUSD will benefit PayPal

PayPal has not shared how much money it is making with its stablecoin. However, assuming that it is investing all the funds in government bonds, which are yielding about 4% today, one can assume that the annual revenue will be about $100 million.

This is a huge amount considering that the margins are almost 100%. The only risk is that the Federal Reserve is cutting interest rates, which will reduce the total revenues.

Still, PayPal’s business will be affected negatively by the stablecoin industry as more users select them for payment. That is because PayPal transactions are often slow and expensive. Some PayPal transactions require a customer to wait for 24 hours before they can use their money.

Also, many companies have always complained about the substantial fees charged by these payment processing firms and many of them are considering for leveraging these stablecoins. For example, PayPal’s Braintree charges shops about 3% for a transaction, meaning that a company pays about $30 for a $1000 purchase. With stablecoins, the fee here is usually less than $1.

Stablecoin growth to offset slowing core business 

The ongoing stablecoin growth will help to offset PayPal’s slowing growth. The most recent results showed that the revenue rose by 5% in the second quarter to $8.3 billion, while the operating margin rose by 14% to $1.5 billion, and the EPS jumped by 20% to $1.29.

This growth happened as the total payment volume rose by 6% to $443 billion. Wall Street analysts expect that PayPal’s business slowdown will continue, with the average estimate for third-quarter revenues being $8.22 billion, up by 4.78% from what it made in the same period last year. 

Analysts also expect that the annual revenue will be $33 billion, up by 4% from what it made last year.

PayPal stock price technical analysis

The daily chart shows that the PayPal share price bottomed at $65.30 in September and then bounced back to the current $72 today. This rebound happened after it formed an inverse head and shoulders pattern, which is is one of the most popular bullish reversal patterns.

The stock has moved above the 38.2% Fibonacci Retracement level at $70. It has also jumped above the 50-day and 100-day Exponential Moving Averages (EMA). 

Most importantly, the stock formed a bullish island pattern, which is a common bullish reversal sign. Therefore, the stock will likely continue rising as bulls target the next psychological level at $80

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A crypto market crash is happening, with Bitcoin plunging below the important support level at $121,000 and the total market capitalization of all coins falling to $4.15 trillion. 

Some of the top laggards in the crypto industry were coins like DoubleZero, World Liberty Financial (WLFI), Pi Network, Zcash, and Pi Network, which all plunged by over 10% in the last 24 hours.

Crypto market crash triggered by high liquidations 

The first main reason why the crypto market crash happened is that liquidations surged in the last 24 hours, forcefully closing positions. Over 180,000 traders who were long cryptocurrencies were liquidated.

Most of the liquidations happened with Ethereum whose positions worth over $170 million were closed. Bitcoin positions worth $160 million were liquidated, while Solana, XRP, and Dogecoin positions worth $48 million, $25 million, and $20 million were closed.

The crypto market normally crashes when long positions are closed forcefully by exchanges, as this usually means more selling among investors.

Crypto crash is happening because of profit-taking 

The other main reason why the crypto crash is happening is that investors are booking profits after a recent rally. Bitcoin price plunged to $120,000, a few days after it soared to a record high of over $126,000. 

Other cryptocurrencies also plunged after the recent rally because of profit-taking among investors. It is highly common for this profit-taking to happen after the crypto or stock market experiences a strong rally over time.

Stock market crash amid AI jitters

The crypto market crash is also happening because of the jitters in the stock market, where some investors are concerned about the AI bubble. 

One reason for this was a 2.52% crash in Oracle shares, which led to more downside among companies in the AI industry like Nebius and CoreWeave. 

The crash happened after a report by The Information warned that Oracle was struggling to profit from the ongoing AI boom despite the massive backlog.

Investors are also concerned about the circular nature of the AI industry, where companies like Nvidia and AMD have announced massive deals with clients like OpenAI and Anthropic.

For example, Nvidia announced a $100 billion deal with OpenAI that will see the latter buy its chips and possibly create to illusion of demand. The same is true with the latest deal between AMD and OpenAI. 

Altogether, OpenAI has announced deals worth over $1 trillion and analysts are questioning how it will ever generate a return on investment.

Some analysts and investors, including Thoma Bravo, have started to warn of a potential bubble in the AI industry. Bubbles often pop at once as happened in 2000 or over an extended period.

US government shutdown ending odds

The other main reason why the crypto market is crashing is that investors now expect that the government shutdown will take a long period to end.

Odds that it will happen on October 15 or later rose by 6% in the last 24 hours to $75%. Those between October 10 and 14 dropped to 23%.

The government shutdown has implications on the crypto market. On the positive side, it is leading to more demand for Bitcoin, which is seen as a safe haven like gold. It is also a positive one as it is affecting the economy, which will push the Fed to cut interest rates.

On the other hand, a prolonged shutdown means altcoin ETFs like XRP and Solana will take longer to be approved.

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