Why chip stocks crashed, oil slid and bitcoin followed

On Wednesday, November 4, American stock markets threw a party. The Dow Jones index rose 3% as investors cheered the result of the US midterm elections. Twenty-four hours later, the party was over. On Thursday the main index of US chipmakers fell 12% in a single day, the tech-heavy Nasdaq lost 5.5%, and roughly $2.3 trillion of value disappeared from the hundred biggest Nasdaq companies.

It didn't stop there. Asian markets followed on Friday, oil was heading for a sharp weekly drop, and bitcoin, which some people still hope will behave like "digital gold", fell right alongside the tech stocks. Then, on Friday afternoon, a surprisingly strong jobs report raised the chance that the US central bank raises interest rates again in December.

If you only saw the headlines, it looked like chaos. Look closer and there is a pattern: the trades that had been most popular in 2026 all unwound at the same time. This article walks through what happened, why, and what to watch next.

What actually happened

Here is the week from October 30 to November 6 in numbers. Most figures run to the market close on November 5; Asian markets and bitcoin run to November 6.

The single most dramatic number is not in the table. On November 5, the VIX, an index that measures how much turbulence investors expect in US stocks over the next month and is often called Wall Street's "fear gauge", jumped almost 70% in one day, from 16.6 to 28.2. According to 24/7 Wall St., only two days since 1990 saw a bigger percentage jump: February 2018 and December 2024.

Ordinary investors felt it too. Vanda Research, which tracks what individual investors buy and sell, said retail traders sold a net $358 million of single stocks by mid-afternoon on November 5, their biggest selling day since March 2020, when COVID first hit markets.

Why did chip stocks fall so hard?

For most of 2026, the hottest trade in the world has been artificial intelligence, and specifically the companies that make the chips and build the data centres that AI runs on. When a trade is that popular, a lot of investors own the same stocks for the same reason. That makes the trade "crowded": if a reason to sell appears, many people head for the exit at once.

Two reasons appeared within a week.

The first was doubt about AI spending. On October 30, Intel's shares fell sharply before the market opened after a weak outlook, and Amazon reported about $77 billion of capital spending in a single quarter, more than double the $35 billion of a year earlier. Huge spending is good news for chipmakers only if investors believe it will eventually pay off. The Nasdaq fell 2.9% that day, which set a nervous tone.

The second was the election. On November 4, after reports that Democrats had won both chambers of Congress, markets first rallied. Zacks, a research firm, said investors welcomed the end of political uncertainty and the prospect of gridlock, meaning fewer big new laws. A day later, a different reading took over for AI stocks. Several outlets, including Yahoo Finance and Euronews, linked Thursday's sell-off to fears that the new Congress and newly elected state governors could restrict the building of data centres and tighten oversight of AI and big tech. Goldman Sachs estimated that about 45% of planned US data-centre capacity could face state-level restrictions.

Not everyone agrees that politics was the real cause. Charlie McElligott, a strategist at Nomura, described Thursday as hedge funds taking profits after a long run, not a change in the fundamental story. Both explanations can be partly true: when a trade is crowded, a modest piece of news can trigger a much bigger move than it deserves.

Oil, gold and the war

The second big story of the week was energy. The price of Brent crude, the main global oil benchmark, fell from $113.43 a barrel on October 30 to $98.29 on November 5, a drop of about 13%. American oil (WTI) fell by a similar amount. On November 4 alone, Brent dropped about 9%.

Reuters and Bloomberg linked the fall to expectations after the election that the US-Israeli war with Iran could calm down, and to oil exports from the Gulf recovering. Iran reported three more attacks on tankers on November 5, which helped prices bounce almost 4% that day. In other words, oil is being pulled between hopes of peace and the reality of ongoing attacks.

Cheaper oil matters well beyond energy companies. It feeds into petrol prices, airline tickets and the cost of moving almost everything, so a big drop eases worries about inflation. That helps explain why government bonds rallied during the week: the yield (the interest rate) on two-year and ten-year US government bonds each fell by 0.10 percentage points by November 5, and Germany's ten-year yield fell to its lowest since late August, according to Trading Economics.

Gold, the classic safe place to hide when markets get nervous, rose about 5.5% to roughly $4,122 an ounce by the morning of November 5.

Then came the jobs report

On Friday, November 6, the US government published its monthly jobs report. Economists expected about 65,000 new jobs in October. The actual number was 165,000. Unemployment fell to 4.1%, wages rose 0.4% in a month, and the previous two months were revised up as well.

Normally a strong jobs market sounds like good news, and for workers it is. For markets this year it is more complicated, because the US Federal Reserve (the Fed) has been raising interest rates to fight inflation. A strong labour market means wages keep rising, which can keep inflation high, which makes another rate rise more likely.

That is exactly how markets reacted. The two-year Treasury yield rose to 4.52%, the dollar strengthened, and futures markets, through the CME's FedWatch tool, put the chance of a December rate hike at about 77–78%, up roughly 10 percentage points in a day, according to AP and Reuters. Gold gave back about 1.2%.

The Fed is not alone. The same week, the Bank of England raised rates for the first time in three years, to 4.00%, and Australia's and Sweden's central banks also raised theirs. Around the world, the cost of borrowing is still going up.

Where did bitcoin fit in?

Bitcoin closed at about $80,500 on November 4, then fell 5.5% the next day, almost exactly in step with the Nasdaq. By Friday afternoon it was around $75,400. Over the full week the loss looks small, about 2.5%, but only because the week started with a rally. From Wednesday's peak to Friday it fell more than 6%.

Two crypto-specific forces made the drop sharper. First, about $1.1 billion of bets on crypto prices were forcibly closed in 24 hours on November 5, roughly 88% of them bets that prices would rise, according to CoinGlass data cited by crypto.news. When traders borrow money to bet, an exchange automatically sells their position if the price moves against them, and that selling pushes prices lower still. Second, US spot bitcoin ETFs, the funds that let ordinary investors own bitcoin through a brokerage account, saw about $1.5 billion flow out over five trading days, according to Farside data cited by CryptoSlate. This came on top of a large hack at the exchange Binance on October 29.

The lesson of the week: in a sell-off driven by tech stocks and interest rates, bitcoin behaved like a high-risk tech asset, not like gold. Meanwhile, Ether and BNB were roughly flat, a reminder that crypto is not one single trade.

How worried should anyone be?

There are real reasons for concern. A one-day 12% fall in the chip index is extraordinary, the VIX spike is among the largest on record, and if the data-centre fears turn into actual laws, the AI trade may face a longer adjustment.

But there are also signs this was mostly about positioning rather than a broken financial system:

• Credit markets stayed calm. The extra interest that companies pay to borrow compared with the US government, called the credit spread, barely changed: 0.94% on October 30 versus 0.93% on November 5 for investment-grade companies, according to FRED data. In real financial stress, this spread usually widens quickly.
• Not everything fell. Hong Kong's market was up about 5% for the week, the UK's FTSE 100 was slightly higher through November 5, and gold rose.
• The forced selling may be done. CoinDesk reported on November 6 that crypto funding rates, a measure of how much traders are paying to keep leveraged bets open, had moved close to neutral, which suggests much of the excess borrowing has been cleared out.

Moves driven by crowded positions can reverse quickly, or they can turn into a longer trend if the worry behind them proves justified. The evidence available at the end of this week does not settle which one this is.

What to watch next

• US inflation data, November 10: the October consumer price index is the next big test of the 77–78% odds of a December rate hike. A soft number could calm markets; a hot one would add to the pressure.
• US producer prices, November 13: a measure of inflation "in the pipeline", before it reaches shop shelves.
• The VIX: if the fear gauge drifts back down from about 28 toward the low 20s, Thursday was likely a one-off flush. If it stays high, nervousness is settling in.
• Credit spreads: if they start to widen, the stress is spreading beyond tech stocks.
• Oil around $100: tanker attacks and any progress in US-Iran talks pull in opposite directions, and oil is the swing factor for inflation.
• Bitcoin ETF flows: a turn from outflows to inflows would be the first sign that buyers are coming back.

In seismic terms, this week was a genuine quake: magnitude 4 out of 5. Whether it was the main event or a foreshock of something bigger depends on the next few data releases, and on whether the fears about AI regulation turn into actual rules.