The Nasdaq plunged more than 5% in a single trading day, and according to estimates by experienced market participants, this is only the beginning. The sell-off could stretch over one to two weeks, and the index could lose up to a quarter of its value from its peak.
The technical picture repeats 1987
The Nasdaq Composite chart shows a structure almost identical to the 1987 crash: for several months the index presses against a ceiling, then breaks through it and sets a record, after which it sharply reverses downward. In 1987, after such a reversal, the Nasdaq crashed from about 450 to 300 points — by a third.
According to MarketSurge, the Nasdaq Composite closed at 24,393.78 points, losing 1,342.73 points, or 5.22%, over the day. Trading volume jumped by 64.5% — when falling on heavy volume, it is large players selling, not random panickers. The index has already dropped below its 50-day moving average and is approaching the 200-day. A break of that line too could accelerate the decline.
Target levels of the crash
Forecast for the depth of the decline from the peak:
- S&P 500 — down 10–15%, in the worst case down 20%;
- Nasdaq — down 20–25%.
The Nasdaq has already lost about 10% from its record high. That means there could be as much or more still ahead. At the same time, the 1987 scenario is not considered the base case — rather, it is a repeat of 1998: a short but painful bear market with a rapid recovery.
Investors are exiting risky stocks
A warning signal is also confirmed by the dynamics of the ratio between the S&P 500 High Beta and S&P 500 Low Volatility indices. The first is made up of the most "nervous" securities, the second of the calmest. When the ratio rises, investors are willing to take risks; when it falls, they shift into defensive assets. The indicator hit the same ceiling twice, in June and October, forming a "double top" pattern, and broke through support. Over the day the ratio lost 3.41%.
Buying in the first days of a sell-off is risky: oversold indicators stop working in a panic, and the market can keep collapsing even when assets look cheap. The rational tactic is to cut leverage and wait for the market to show a bottom on its own.
Cryptalist analysis: The market has shifted into risk-off mode, as evidenced by rising volume on the decline and the breakdown of the defensive High Beta/Low Volatility ratio. For cryptocurrencies, this is a classic signal of strengthening correlation with high-risk assets: if the sell-off continues, capital will flow into defensive instruments, and the "hottest" assets will suffer the most. Cryptalist's institutional view is that risk management takes priority over searching for an entry point until the Nasdaq's 200-day moving average stabilizes.