What if a big institutional prime money-market fund breaks the buck?
A prime MMF breaking the buck triggers gates and a dash from prime to government funds, draining CP/funding and forcing a broad de-risk — highest-beta crypto (SOL) and HY credit lead lower while VIX bids. Exact analogue is Reserve Primary breaking the buck in Sept 2008, which froze CP and forced the Fed's MMF backstop. Prime funds fund bank/corporate short-term paper; their flight starves issuers of rollover. Forward angle: post-2016 reform floating NAV and 2020's MMLF playbook mean the Fed reacts within days — but the reflex sell-off in crypto and HY comes first.
how we built this number — every step
The class rate is measured from our dated, sourced event library (decade-normalized Poisson — the full table is public at base_rates.json). The variant’s share within its class is the analyst’s editorial call, published so you can audit it. A wider range means thinner precedent. Full recipe: methodology · scored at Reality Check.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (gold) over time vs the crowd's (Polymarket, blue), from the past toward the Tail risk horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. The gold path is an illustrative reconstruction anchored to today's estimate — real dated events, not a live re-estimate history.
What it would mean
If this plays out, it is a risk-off shock. A large institutional prime money-market fund's NAV falls below $0.995, triggering gates, fee hikes, and a system-wide dash to government funds. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Financial conditions ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.
If it happens — the markets it would move
Biggest moves first. Projected moves are cascade-model priors; hist A–B% = what comparable past events actually did (measured abnormal returns), and model prior · unmeasured marks markets with no analogue backing yet. Tap any market for its price history.
| Market | Class | Projected move | |
|---|---|---|---|
| 1 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -2.9% hist -13.67–+0.28% · other way -1.04% (n=11) |
| 2 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▼ -3.1% hist -5.67–+0.32% · other way +27.47% (n=12) |
| 3 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -2.0% hist -1.75–-0.44% · other way +0.06% (n=12) |
| 4 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▼ -2.0% hist -9.87–+1.53% · other way +4.87% (n=11) |
| 5 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▼ -1.9% model prior · unmeasured |
| 6 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▼ -1.7% hist -4.8–+0.86% · other way +6.05% (n=11) |
| 7 | High-yield credit HYG 📈 chart | Rate | ▼ -1.6% hist -1.11–-0.34% · other way -0.28% (n=12) |
| 8 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +1.6% hist -1.34–+4.89% · other way -0.58% (n=12) |
| 9 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -1.3% hist -0.98–-0.41% · other way +0.04% (n=12) |
| 10 | Tech sector XLK 📈 chart | Equity | ▼ -1.4% hist -0.95–-0.29% · other way +0.09% (n=12) |
| 11 | Coinbase COINon Hyperliquid 📈 chart | Equity | ▼ -1.2% hist -4.57–+1.16% · other way +21.75% (n=11) |
| 12 | Financials XLF 📈 chart | Equity | ▼ -1.1% hist -0.63–-0.3% · other way +0.01% (n=12) |
| 13 | JPMorgan JPM 📈 chart | Equity | ▼ -0.9% hist -0.84–+0.3% · other way +2.16% (n=12) |
| 14 | Semiconductors SMHon Hyperliquid 📈 chart | Equity | ▼ -0.9% hist -0.73–+0.83% · other way +2.75% (n=12) |
Probable recommendation
Why we may diverge from history
Trust the cascade short on INTC: its +4.8% is regime-contaminated — three of four analogues are the single March-2023 SVB rebound cluster, and INTC's tape is driven by its foundry turnaround, not prime-fund stress.
Historical precedent — what analogous events actually did
Across 40 analogous events (overlap‑weighted), as abnormal returns — market beta stripped, so it's the event's own effect, not the market backdrop. Shown at 20 days (persistent) and 5 days (immediate); ↺ fades = the two horizons disagree. Confidence = consistency × sample × significance.
| Asset | History says | Abnormal (20d · 5d) | Hit | n | Confidence | vs cascade |
|---|---|---|---|---|---|---|
| SOL SOL | SHORT | -10.0% · 5d -7.8% | 83% | 20 | 0.42 | ✓ matches cascade |
| ETH ETH | SHORT | -7.8% · 5d -5.6% | 70% | 20 | 0.27 | ✓ matches cascade |
| High-yield credit HYG | SHORT | -0.3% · 5d +0.0% ↺ fades | 66% | 35 | 0.26 | ✓ matches cascade |
| MSTR MSTR | SHORT | -3.8% · 5d -3.3% | 65% | 37 | 0.25 | ✓ matches cascade |
| Gold XAU | LONG | +0.7% · 5d +0.2% | 61% | 37 | 0.20 | ✓ matches cascade |
| SMH SMH | LONG | +1.2% · 5d -0.9% ↺ fades | 60% | 37 | 0.16 | ⚠ differs |
| Bitcoin BTC | SHORT | -3.6% · 5d -2.1% | 60% | 21 | 0.15 | ✓ matches cascade |
| COIN COIN | SHORT | -3.7% · 5d +1.5% ↺ fades | 57% | 20 | 0.12 | ✓ matches cascade |
| ASML ASML | SHORT | -2.2% · 5d -3.0% | 58% | 37 | 0.12 | ✓ matches cascade |
| XLF XLF | LONG | +0.1% · 5d -1.0% ↺ fades | 56% | 37 | 0.11 | ⚠ differs |
| AVGO AVGO | LONG | +2.2% · 5d -0.8% ↺ fades | 56% | 29 | 0.11 | ⚠ differs |
| QCOM QCOM | SHORT | -2.3% · 5d -3.0% | 58% | 38 | 0.10 | ✓ matches cascade |
| USDJPY USDJPY | LONG | +0.0% · 5d -0.2% ↺ fades | 54% | 37 | 0.08 | ⚠ differs |
| NDX NDX | SHORT | -0.6% · 5d -1.7% | 54% | 39 | 0.07 | ✓ matches cascade |
Why this probability
Post-2016 reforms shrank institutional prime MMFs; breaking the buck is a genuine tail event. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.