Invest Answers3 min read
InvestAnswers: Bitcoin ETF outflows and 0.8 NASDAQ correlation signal "not good" week
James (InvestAnswers) walks through heavy crypto ETF outflows, a record Bitcoin-stock correlation and an AI selloff he calls a buying opportunity, not a bubble.
AI summary of “AI Crash vs. BTC Post-Midterms: Cooked?! Chips, ETFs & What’s Next”
Key takeaways
- James says Bitcoin fell 5%, Ethereum 10% and XRP 16% over seven days as fear and greed sits at 32.
- Bitcoin ETFs lost $1.2 billion last week with BlackRock dumping daily, which James says explains the price drop.
- Bitcoin's 30-day correlation with the S&P 500 hit 0.8, the highest in nearly five years, per Glassnode.
- James argues there is "no AI bubble," citing NASDAQ 100 forward P/E at its lowest since October 2022.
- He flags rising default-protection costs on chipmakers versus hyperscalers as a new risk to watch.
Tokens mentioned
The speakers' views, not ours
Calls BTC 'schmuck insurance' long-term, though flags no V-shaped recovery without new catalyst
“it's schmuck insurance. It's not, you know, the fastest horse, but it's the horse there for the endtime preparation”
Flags severe ETF outflows, unsure why price holds up at all
“Extremely heavy outflows out of ETH in September... It's like nobody wants ETH anymore”
Five straight weeks of outflows but smaller relative fund size than ETH
“consecutive one, two, three, four, five consecutive weeks of outflows”
Crypto ETF outflows are driving the downturn, James argues
James opens with what he calls "ugly" news: crypto fear and greed sits at 32, and the last seven days show Bitcoin down 5%, Ethereum down 10%, XRP down 16%, Solana down 10% and Binance down 4%. He ties this directly to Bitcoin ETF flows, noting outflows in five of the last six weeks, including a $1.2 billion weekly loss, with BlackRock dumping "a quarter of a billion to 400 million" repeatedly.
"When there's no money going into the ETFs, there's no action."Ethereum ETF outflows are described as worse, often $200 million a day in September against a $12 billion fund, while Solana has seen five consecutive weeks of outflows despite a smaller $1.3 billion fund.
James also highlights that Bitcoin and gold are "dead last" in year-to-date asset performance per Charlie Bilello's table, with Bitcoin down 13% and gold down 6%, which he calls unusual for assets viewed as monetary hedges. He cites Glassnode data showing Bitcoin's 30-day correlation with the S&P 500 at 0.8, the highest in nearly five years, and argues ETF flows matter far more than Bitcoin treasury buying: roughly 10,000 BTC of ETF inflows corresponds to a 3.2% monthly return, versus just 0.7% from treasury companies like MicroStrategy.
He is critical of Michael Saylor's continued STRC purchases rather than Bitcoin itself:
"He should be buying Bitcoin, not STRC. Please stop diluting Micro Strategy."He also notes crypto-native traders rotating into AI equities, with decentralized-venue equity trading volume reaching 126% of Bitcoin trading volume, chasing names like SanDisk and Micron instead of spot crypto.
The AI stock selloff, James says, is a buying opportunity rather than a bubble
Turning to equities, James describes a "bloodbath" in tech, with the top 20 largest market-cap losers erasing $5.6 trillion over a month and Nvidia alone losing $1.2 trillion in market cap. Nvidia fell 25% from its peak, its biggest drawdown since April 2025, and hit "minus 2.6 standard deviations" on analyst sentiment, which James calls the most bearish print on record. He argues such extremes in Wall Street negativity historically precede upside surprises.
He points to valuation data to argue there is no bubble: the NASDAQ 100's forward P/E is at its lowest level since October 2022, and the Philadelphia semiconductor index's two-year forward P/E has dropped from over 30x to 10x despite companies "growing at 80 plus% per year." He also cites a historic five-day 22% plunge in the semiconductor index as one of the largest since 1994, which he frames as a classic overreaction.
"These are the times you wait for. These are the times when the markets pooped bad, you should get excited, not depressed."
Despite the selloff, James notes underlying AI compute demand looks strong, with B200 GPU demand up 74% over 12 weeks at $10 per GPU hour, and AMD's data center revenue up 97% year-over-year to $8.6 billion. He flags a new risk, however: credit markets now price higher default protection on chipmakers than on hyperscalers, a reversal he says is worth watching.
Big tech's AI spending commitments and the Anthropic IPO
James cites an estimate that Google, Meta, Anthropic and Microsoft have accumulated roughly $4.5 trillion in multi-year compute lease and purchase obligations, with Anthropic alone said to carry around $600 billion in obligations. He notes Anthropic's reported IPO valuation has fallen from $2 trillion to $1 trillion, saying he previously said he would short it at $2 trillion but would not short at $1 trillion given possible FOMO buying.
He expects the current AI capex cycle to continue without slowing "until maybe 2028," suggesting investors should watch that year for a potential pullback, while expecting "a lot of casualties along the way," including among neoclouds. He closes by reiterating confidence in current valuations as a long-term entry point, saying he has "never seen in 36 years a more glorious time to be an investor."
Written by AI from the video's transcript. It can compress, misattribute or miss context — the original video is the source. Not investment advice.
