TeraWulf Plummets 10% Amid AI Bubble Fears and Bitcoin Slide – What’s Next for the Tech Miner?

Summary
• TeraWulf (WULF) crashes 10% to $11.65, its lowest since December 2024
• Bitcoin’s 2.2% drop and AI sector jitters amplify sell-off
• $3.2B data center deal sparks debate: bold expansion or risky gamble?

Today’s 10% plunge in TeraWulf’s stock has sent shockwaves through the tech-mining sector. Amid a broader AI market correction and Bitcoin’s renewed weakness, WULF’s shares have swung from $13.42 to $11.625 in a single session. The stock’s collapse follows a $3.2 billion debt-fueled data center push, now under scrutiny as analysts split between bullish expansion bets and bearish leverage concerns.

AI Bubble Fears and Bitcoin’s Slide Trigger WULF’s Freefall
TeraWulf’s 10% intraday drop stems from a dual crisis: AI sector overvaluation fears and Bitcoin’s 2.2% decline. The stock’s recent $3.2 billion senior secured notes offering—intended to fund a Google-backed data center—has backfired as investors question the timing. With AI stocks like Oracle and Nvidia also retreating, the sector’s speculative fervor is cooling. Meanwhile, Bitcoin’s slide to $85,450 has spooked crypto-linked miners, with WULF’s EBITDA of -$417.55M and 31.2 price-to-sales ratio amplifying vulnerability.

IT Services Sector Mixed as IBM Gains 0.54%
The IT Services sector remains fragmented, with IBM (IBM) rising 0.54% despite WULF’s collapse. While TeraWulf’s debt-heavy strategy faces scrutiny, sector peers like Hut 8 (HUT) show divergent momentum. IBM’s resilience highlights the sector’s bifurcation, where established players benefit from stable demand, while high-risk, high-debt ventures like WULF face liquidity pressures.

Bearish Playbook: Puts and ETFs to Hedge the AI Correction
• 200-day MA: $7.5178 (well below current price)
• RSI: 45.01 (oversold territory)
• Bollinger Bands: $11.00–$16.95 (price near lower band)
• MACD: 0.206 (bearish divergence with 0.39 signal line)

Key levels to watch: $11.00 (Bollinger support), $13.98 (200-day MA), and $16.95 (resistance). Short-term technicals favor a continuation of the downtrend, with WULF’s -6.87 PE ratio and -337.5% margin signaling structural weakness. No leveraged ETF data is available, but sector peers like Hut 8 (HUT) show divergent momentum.

Top Options:
• WULF20251226P11 (Put): Strike $11, Expiry 12/26, IV 134.35%, Delta -0.322, Theta -0.018, Gamma 0.1798, Turnover 94,580
- High IV reflects volatility premium; moderate delta for directional exposure; strong gamma for price sensitivity.
- Payoff at 5% downside ($11.10): $0.10/share (100% return on $10 premium).
- Ideal for capitalizing on near-term support breakdowns.

• WULF20251226P11.5 (Put): Strike $11.5, Expiry 12/26, IV 97.82%, Delta -0.4198, Theta -0.014, Gamma 0.206, Turnover 130,590
- Balanced IV and delta; high gamma for responsiveness; robust liquidity.
- Payoff at 5% downside ($11.10): $0.40/share (400% return on $10 premium).
- Offers higher reward-to-risk ratio for a 5% move.

Action: Aggressive bears should prioritize WULF20251226P11.5 for its 400% upside potential. Conservative traders may pair WULF20251226P11 with a stop above $13.98 to limit risk.

Backtest TeraWulf Stock Performance
The backtest of WULF's performance after a -10% intraday plunge from 2022 to now shows favorable results. The 3-Day win rate is 52.57%, the 10-Day win rate is 52.37%, and the 30-Day win rate is 57.31%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest was 21.48% over 59 days, suggesting that WULF has the potential for significant rebounds after a sharp decline.

WULF’s Freefall Likely to Continue—Act Now on Put Options
TeraWulf’s technicals and fundamentals align for a prolonged bearish phase. With AI sector sentiment souring and Bitcoin’s decline weighing on crypto miners, WULF’s $11.00 support level is the next critical test. Microsoft’s 0.45% gain in IT Services highlights sector divergence, but WULF’s leverage and operational losses make it a high-risk play. Investors should prioritize the WULF20251226P11.5 put for maximum leverage. Watch for a breakdown below $11.00—confirmation of a new downtrend—or a rejection above $13.98, which could trigger a short-covering rally. IBM’s 0.54% gain underscores the sector’s mixed outlook, but WULF’s structural challenges demand immediate action.