What if a volatility spike forces funds to dump $300bn of equities?
A vol spike forcing risk-parity and vol-control funds to mechanically dump ~$300B of equities is the cleanest example of systematic deleveraging amplifying a selloff — supply is price-insensitive, so high-beta (SOL, Nasdaq) craters. This is the textbook Feb-2018 Volmageddon and Aug-2024 vol-target unwind. Forward angle: vol-control AUM and the speed of VIX spikes have grown, so the mechanical sell program hits in hours, not days. Roots (max VIX, deeply negative risk_appetite) are exactly right for this systematic-flow shock.
Every number ships with its receipt — the odds, the range, the precedents, and a public grade at Reality Check. The statistical machinery that produces it is proprietary.
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 (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 0–6 months 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. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. A vol spike forces risk-parity and vol-control funds to mechanically dump $300B of equities, amplifying the selloff. The trigger decomposes into signed root‑shocks — Volatility (VIX) ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.