Global market crash, what exactly happened?
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Global market crash, what exactly happened?
Let's compare who's worse off.
Navigating Web3 tides with focused insightsBy Liam, TechFlow
November 21, Black Friday.
U.S. stocks plunged, Hong Kong stocks tumbled, A-shares declined in tandem, Bitcoin briefly dropped below $86,000, and even safe-haven gold continued to fall.
All risk assets seemed pressed down by the same invisible hand, collapsing simultaneously.
This is not a crisis of any single asset, but a systemic resonance-driven global market downturn—what exactly happened?
Global Plunge: Everyone’s Playing the Victim
After suffering a "Black Monday," U.S. stocks plunged again.
The Nasdaq 100 Index dropped nearly 5% from its intraday high, finally closing down 2.4%, with the drawdown from its record peak on October 29 widening to 7.9%. Nvidia's stock flipped from up over 5% to negative territory by close, wiping out $2 trillion in market value overnight.
Hong Kong and A-shares across the Pacific were no exception.
The Hang Seng Index fell 2.3%, while the Shanghai Composite dropped below 3,900 points, down nearly 2%.
Of course, the hardest hit was the crypto market.
Bitcoin broke below $86,000, Ethereum fell below $2,800, and over 245,000 people were liquidated within 24 hours, totaling $930 million in losses.
Since peaking at $126,000 in October and briefly dipping below $90,000, Bitcoin has erased all its 2025 gains and is now down 9% from its year-start price. Panic is spreading through the market.
Even more alarming, gold—the supposed "hedge" against risk—failed to hold. On November 21, it dropped 0.5%, hovering around $4,000 per ounce.
Who Is to Blame?
The Federal Reserve is the primary suspect.
For the past two months, markets had been basking in expectations of a December rate cut. But the Fed’s sudden shift in tone poured cold water on all risk assets.
In recent statements, multiple Fed officials collectively adopted an unusually hawkish stance: inflation is slowing too slowly, the labor market remains strong, and they “would not rule out tightening further” if necessary.
This essentially told the market:
"A December rate cut? You’re dreaming."
CME's "Fed Watch" data confirms how quickly sentiment collapsed:
A month ago, the probability of a rate cut stood at 93.7%; today, it has plummeted to 42.9%.
The abrupt collapse of this expectation instantly sent U.S. equities and crypto markets from KTV to ICU.
After the Fed burst the rate-cut bubble, all eyes turned to one company: Nvidia.
Nvidia delivered an earnings beat for Q3. In theory, this should have ignited tech stocks. Yet, despite this seemingly perfect positive catalyst, the stock quickly turned red and plummeted from highs.
When good news fails to lift prices, that itself becomes bad news.
Especially in a high-valuation tech cycle, favorable developments may no longer push prices higher—they instead become opportunities to exit.
At this moment, Michael Burry, the prominent short-seller heavily betting against Nvidia, added fuel to the fire.
Burry repeatedly questioned the complex, multi-billion-dollar "circular financing" among AI firms like Nvidia, OpenAI, Microsoft, and Oracle, stating:
The real end demand is laughably small; almost all customers are funded by their distributors.
Burry had previously issued multiple warnings about the AI bubble, comparing the current AI boom to the dot-com bubble.
John Flood, a Goldman Sachs partner, bluntly noted in a client report that no single catalyst can fully explain this sharp reversal.
He believes market sentiment is already scarred, investors have shifted entirely into profit-and-loss protection mode, and are overly focused on hedging risks.
Goldman Sachs' trading desk summarized nine factors currently driving the U.S. equity sell-off:
Nvidia’s positive catalysts exhausted
Despite beating Q3 expectations, Nvidia failed to sustain its rally. Goldman commented, “When genuinely good news isn’t rewarded, it’s usually a bad omen,” indicating the market had already priced in these positives.
Rising concerns over private credit
Fed Governor Lisa Cook publicly warned of potential valuation fragility in the private credit sector and its complex linkages to the financial system, sparking market caution and causing credit spreads to widen overnight.
Employment data fails to reassure
While September’s nonfarm payrolls were solid, they lacked clarity sufficient to guide the Fed’s December rate decision. The rate cut probability rose only slightly, failing to calm market uncertainty about interest rate outlooks.
Crypto crash contagion
Bitcoin breaking below the psychological $90,000 level triggered broader risk asset selloffs. Its decline even preceded the U.S. stock plunge, suggesting risk sentiment may have first unraveled in high-risk sectors.
CTA selling accelerates
Commodity Trading Advisors (CTAs) had previously been extremely long. As markets breached short-term technical thresholds, systematic CTA selling accelerated, intensifying downward pressure.
Short sellers re-enter
The reversal in market momentum created opportunities for bears. Short positions began reactivating, pushing prices further down.
Poor performance in overseas markets
Weakness in key Asian tech stocks (such as SK Hynix and SoftBank) failed to provide supportive external conditions for U.S. equities.
Market liquidity dries up
Goldman Sachs data shows liquidity depth at the top bid/ask levels of the S&P 500 has significantly deteriorated, falling far below yearly averages. This near-zero liquidity state severely impairs the market’s ability to absorb sell orders—small-scale selling can trigger large swings.
Macro trading dominates the market
ETF trading volume surged as a share of total market volume, indicating that market activity is increasingly driven by macro views and passive funds rather than individual stock fundamentals, amplifying downward momentum.
Is the Bull Market Over?
To answer this question, consider Ray Dalio, founder of Bridgewater Associates, and his latest view on Thursday.
He believes that while AI-related investments are fueling a market bubble, investors don’t need to rush into liquidation.
The current market situation doesn’t fully resemble the bubble peaks seen in 1999 or 1929. Instead, based on indicators he monitors, the U.S. market is currently around 80% of that level.
This doesn’t mean investors should sell stocks. "I want to emphasize: many things could still rise before a bubble bursts," Dalio said.
In our view, the November 21 drop wasn’t a sudden "black swan," but a collective run following highly uniform expectations—and it exposed several critical issues.
Real global market liquidity is extremely fragile.
Currently, "tech + AI" has become a crowded trade for global capital—any minor turning point can trigger a chain reaction.
Particularly, an increasing number of quantitative strategies, ETFs, and passive funds now support market liquidity, altering market structure. The more automated trading strategies become, the easier it is to create "stampedes" in the same direction.
Therefore, we see this sell-off fundamentally as:
A "structural crash" caused by automated trading and excessive crowding.
Additionally, an interesting phenomenon: this time, Bitcoin led the decline—crypto has truly entered the global asset pricing chain for the first time.
BTC and ETH are no longer fringe assets. They’ve become thermometers for global risk assets, positioned at the very front end of market sentiment.
Based on the above analysis, we believe the market hasn't truly entered a bear phase, but has instead entered a high-volatility phase, requiring time to recalibrate expectations around "growth + interest rates."
The AI investment cycle won’t end abruptly, but the era of "blind rallies" is over. Markets will shift from expectation-driven to earnings-delivery-driven—true for both U.S. and A-shares.
Within this downturn cycle, cryptocurrencies—having fallen earliest, leveraged highest, and liquidity weakest—have dropped the most, yet often rebound first.
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