Yves here. Yours truly is the poorest judge of how far the mania can go. I remember in December 1996 when Alan Greenspan wondered if dot com prices were a sign of irrational exuberance. When the Dow fell 143 points because of his words, Greenspan made it a point not to disrupt that bubble again. Still, it was surprising to see delusions becoming commonplace, such as companies setting prices that obviously won’t make a dime for eyeballs, or it becoming commonplace for MBA students to be able to raise $5 million with a 5-page internet business plan. Today, it took Ed Zitron and other financial experts to try to open the extremely unprofitable economy of AI companies, which were chip builders, thanks to both games like circular financing and reporting methods.
We skipped the latest Strategy tsuris even though we explained it in detail back when doubts first arose:
🚨 STRATEGIES NOW IN A VERY DANGEROUS SITUATION
The company used $1.38 billion, about 61% of its total cash reserves, to buy back debt at a discount.
The scheme now has $870 million in cash remaining while holding $64.8 billion worth of Bitcoin.
One sharp BTC crash could change… pic.twitter.com/v90DJRfr4b
— Crypto Rover (@cryptorover) May 26, 2026
Some cheery tests:
Bitcoin dropped to $68K for a reason.
History repeats itself.
Bull trap at $97K, then $83K. Exactly as expected.
Now $BTC is dropping like this:
$65K → $61K → $58K → $55K → $48K.
Next stops:
→ $60K in days.
→ $48K in September.I bid a whopping $126K in October 2025… pic.twitter.com/PN30tS9aTH
— Noncee (@0xNonceSense) June 2, 2026
By Wolf Richter, editor of Wolf Street. Originally published in Wolf Street
Bitcoin, currently trading around $63,000, is down more than 50 percent from its peak last October and is down 37 percent year-to-date. In terms of market cap, expressed in inflation-wracked US fiat, about 1.2 billion dollars worth of bitcoin has gone up into thin air.
Ethereum, the second largest crypto by market cap, is down 64% from its peak last August, down 26% year-over-year, and $364 billion in market capitalization has disappeared from its peak.
XRP, another top crypto by market cap, is down 68% from its peak in July last year. About $138 billion disappeared.
CoinMarketCap’s crypto market index, which tracks all major cryptos, has fallen by $2.08 trillion since October. More than 2 billion dollars, exposed in deprecated fiat, went up in smoke. And yet, outside of the crypto world, there have never been significant ripples.
On the other side of the equation the biggest gains of these cryptos were generated until their peak last year. Early bets on these cryptos were among the winningest bets of all time. Bitcoin went from zero to a market value of $2.5 trillion in a span of 16 years, without ever having to produce any kind of product or service, revenue or profit, or financial statements, or go through confused analysts on an earnings call or whatever.
Other cryptos, now many thousands of them, have come to replicate that. Cryptos have been the best get rich quick scheme of all time. But anyone can create their own cryptos, and there are thousands of other cryptos now, many of which are left behind after they die.
But who needs get-rich-quick cryptos when the stock market technology sector is already providing that service for free and with little hassle?
And there are mega-IPOs on the rise, including SpaceX, which is going to the moon literally, not just figuratively, and its IPO valuation is already going to the moon, at $1.77 trillion. At this price, it is worth 93 times its trailing 12-month profit of $18.7 billion, and now it’s time to sell cryptos to release cash to buy SpaceX to hit the next mania on the moon? With SpaceX, people will at least get a piece of a real company with amazing products and innovations, not just digital units on the blockchain.
Or sell cryptos and buy semiconductors that generate WTF charts every day? The other day, we talked about Micron’s market cap rising to $1 trillion, from $500 billion, in 48 trading days. The share price has exploded more than 850% in 12 months and more than 1,300% in 14 months. Shares have risen sharply in the past few days, but today they are slightly lower.
If you look closely, you can see the Dotcom Bust, where stocks fell 98%, and stayed below 2000 for 24 years (data via YCharts).
For a good look at the mania in the broader semiconductor space: Direxion Daily Semiconductor Bull 3X Shares [SOXL] it has increased 550% in the last two months, since the end of March. In the last 12 months to yesterday, it has increased more than 1,400%, which means it has multiplied by 14. Today, it has given up some of those benefits.
Subsequently, it is not uncommon for this triple-digit semiconductor ETF to drop more than 90%, which it just did in 2022. Statistically, SOXL would have to drop 93% this time to erase the 1,500% gain of the past 12 months.
Is this still a good time to chase this madness? This chart shows the percentage gains of SOXL and MU over the past 12 months (data via YCharts).
Why bet on cryptos when you can have so much fun, and easily, and quickly, with semiconductor stocks that have become mania and gone parabolic, and triple the fun with triple ETFs?
But dollar values are big for the semiconductor industry and AI-related stocks. Therefore, the dollar amounts of gains in portfolios are large, and are reflected in widely held common ETFs, such as the S&P 500 index fund, which is dominated by a dozen stocks combined worth $30 trillion. And when they finally turn south, they will make a big bend in dollar terms.
Crypto’s 50% decline wiped out $2 trillion, and it didn’t generate ripples outside of the crypto space. A 20% drop in the top 12 stocks by market value, excluding SpaceX at the moment, would take $6 billion. The total market value of stocks in the S&P 500 is currently close to $70 trillion. A 20% drop would take about $14 trillion.
But like cryptos, these shares are distributed around the world, not just in the US, and are partly held by institutional investors, not just retail investors.
So any damage is spread across the world, not just in the US, and spread across classes of investors, not just retail investors.
And in the past, a 20% decline did not produce much economic volatility in the US. But the biggest downturn during the Dotcom Bust eventually produced economic instability, although the most economic damage occurred in the cities where these companies were located, while the ripples were much smaller.
