The speed of the crypto crash—dropping $1 trillion in six weeks—points to the role of algorithmic trading. In modern markets, trading bots execute sell orders in milliseconds when key technical levels are breached. When Bitcoin fell below $100,000 and then $95,000, it likely triggered a cascade of automatic sell orders that pushed it down to $91,212.
This “flash crash” dynamic is a risk in the stock market too. With so much wealth “automatically allocated” via passive funds, a similar algorithmic sell-off could hit Nvidia and the S&P 500.
Sebastian Siemiatkowski’s warning about “automatic” wealth is not just about index funds; it’s about the automated nature of modern finance. When the algorithms decide the trend is over, the exit door is too small for everyone to get through.
Investors need to understand that they are trading against machines. In a panic, the machines win.