Nearly $2T wiped out in a sudden market crash. Here’s what caused the global selloff, from liquidity stress to IPO-driven cash rotation and macro fear.
Quick Take:
Global markets just went through a sharp and fast-moving selloff that erased nearly $2 trillion from US equities in a matter of hours, according to Bull Theory. At the same time, Japan’s Nikkei index dropped 1.5%, adding another ¥21.45 trillion ($130 billion) in losses, showing that this was not just a local move but a global risk-off wave.
What makes this crash interesting is that there was no single clear trigger. Instead, multiple forces seem to have stacked on top of each other at the same time: liquidity pressure, large upcoming market events, and aggressive positioning shifts across both retail and institutional players.
Here’s a simple breakdown of what may have caused the sudden wipeout.
The first and biggest factor is a broad liquidity shock spreading across markets. Bull Theory suggests that both retail traders and institutions were forced into raising cash simultaneously, which created a chain reaction across asset classes.
Retail investors are reportedly selling positions to prepare for upcoming market events, while institutions are adjusting portfolios ahead of major index changes and expected passive inflows. When both sides start reducing exposure at the same time, it doesn’t just create selling pressure; it accelerates it.
This is often how sharp market moves happen. It starts as normal profit-taking or repositioning, but once liquidity dries up, even small selling turns into large-scale downside momentum. That’s exactly the type of environment that can wipe out trillions quickly, especially in highly leveraged markets.
One of the most discussed theories behind the selloff is the upcoming SpaceX IPO, expected to list on June 12 at a staggering $1.77 trillion valuation, making it the largest IPO in US history.
According to the analyst, around 30% of shares have been allocated to retail investors, which is significantly higher than the industry norm. But even with that allocation, demand still exceeded supply. As a result, many retail traders are believed to be selling existing positions in order to raise cash for participation in the IPO.
This creates a ripple effect across markets as money is pulled out of equities and risk assets to prepare for allocation elsewhere.
On the institutional side, the impact could be even more mechanical. SpaceX is expected to enter the Nasdaq 100 after just 15 trading days, following a recent rule change that reduced the inclusion timeline from three months.
Once it enters the index, passive funds tracking QQQ are expected to trigger around $22–$27 billion in forced buying. MSCI adjustments could also add additional inflows. But before that happens, institutions are already repositioning portfolios to prepare for these flows, which is creating short-term selling pressure across existing holdings.
The third reason is what analysts are calling “forced positioning stress.”
Analyst further argues that retail and institutional investors are both raising liquidity at the same time, but for different reasons. Retail is preparing for IPO exposure, while institutions are preparing for index-driven inflows and rebalancing requirements. This overlap is creating unusually strong selling pressure across equities, crypto, and broader risk assets.
There’s also speculation about “insider positioning,” where large players may be adjusting portfolios ahead of major macro or structural events that the broader market has not fully priced in yet. While this is not confirmed, it adds to overall fear and uncertainty, which amplifies volatility.
At the same time, macro tensions are adding fuel to the move.
Veteran economist Peter Schiff pointed out that rising geopolitical risks, including renewed concerns around Iran, are increasing pressure on markets.
Precious metals reacted quickly. Gold slipped below $4,200, while silver moved closer to $64. Even though both metals pulled back in the short term, Schiff argues the long-term bullish case remains intact, especially if geopolitical instability continues.
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