Most of the drop in XIV was intraday. So any volatility system with a good stop loss would have avoided most of the drop even if it was in XIV.
It’s crazy not to have a stop loss combined with a system that only issues end of day (or beginning of day) signals, for an instrument that could fall 30% or more in one day. Some developers say their backtests work better without stop loss on XIV. However the future is not the same as the past and if your one signal per day system is of by just 1 day the results could be catastrophic without a good stop loss. To assume your system will always avoid the massive down days in the future means you have a overfitted system that works too well only in the past.
A XIV / VXX system should either have a good stop loss strategy or be able to issue signals any time of the day (adapt quickly to the daily situation) to be really robust.