What exactly happened during the global big dump?

Written by: Liam, Deep Tide TechFlow

November 21, Black Friday.

U.S. stocks plunged, Hong Kong stocks fell sharply, and A-shares also declined simultaneously. Bitcoin briefly fell below $86,000, and even safe-haven gold continued to decline.

All risk assets seem to be pressed down by the same invisible hand, collapsing simultaneously.

This is not a crisis of a particular asset, but rather a systemic resonance decline in the global market. What exactly happened?

Global crash, everyone come to compare miseries.

After experiencing “Black Monday,” the U.S. stock market has once again faced a significant decline.

The Nasdaq 100 index plummeted nearly 5% from its intraday high, ultimately closing down 2.4%, with the pullback from the record high set on October 29 widening to 7.9%. Nvidia's stock price went from a rise of over 5% to closing down, as the entire market evaporated $2 trillion overnight.

The Hong Kong stocks and A-shares across the ocean have not been spared.

The Hang Seng Index fell by 2.3%, and the Shanghai Composite Index broke below 3900 points, with a decline of nearly 2%.

Of course, the most tragic must be the cryptocurrency market.

Bitcoin fell below 86,000 USD, Ethereum fell below 2,800 USD, and over 245,000 people were liquidated within 24 hours, totaling 930 million USD.

Starting from the high point of $126,000 in October, Bitcoin has fallen and at one point dropped below $90,000, erasing all gains made in 2025 and down 9% from the beginning of the year, creating a wave of panic in the market.

Even more frightening is that gold, which acts as a “hedge” for risk assets, also couldn't hold up, falling 0.5% on October 21, hovering around $4000 per ounce.

Who is the mastermind?

The Federal Reserve is the first to be affected.

In the past two months, the market has been immersed in the expectation of a “rate cut in December,” but the sudden shift in attitude from the Federal Reserve has poured cold water on all risk assets.

In recent speeches, several Federal Reserve officials rarely collectively leaned hawkish: inflation is decreasing slowly, the labor market is resilient, and they do not rule out further tightening if necessary.

This is equivalent to telling the market:

“Interest rate cut in December? Too much thinking.”

CME “Federal Reserve Watch” data confirms the speed of the emotional collapse:

A month ago, the probability of a rate cut was 93.7%, but it has now fallen to 42.9%.

The sudden collapse of expectations caused the US stock market and the crypto market to instantly transition from KTV to ICU.

After the Federal Reserve burst the interest rate cut expectations, the market is only focused on one company, Nvidia.

Nvidia delivered a better-than-expected Q3 earnings report, which should have ignited technology stocks. However, such a “perfect” positive news quickly turned into losses and a sharp drop from the highs.

If good news doesn't lead to a rise, it's the biggest bad news.

Especially during the cycle of overvalued tech stocks, if favorable news no longer drives up stock prices, it instead becomes an opportunity for exit.

At this time, the major short-seller Burry, who has been consistently shorting Nvidia, also added fuel to the fire.

Burry has continuously posted articles questioning the complex billions of dollars “circular financing” among AI companies like NVIDIA, OpenAI, Microsoft, and Oracle, stating:

The actual terminal demand is laughably small, with almost all customers funded by their dealers.

Burry has previously issued multiple warnings about the AI bubble and compared the AI boom to the internet bubble.

John Flood, a partner at Goldman Sachs, stated in a report to clients that a single catalyst is not enough to explain this dramatic reversal.

He believes that the current market sentiment is battered, and investors have fully entered profit and loss protection mode, overly focused on hedging risks.

Goldman's trading team summarized the current nine factors leading to the decline of the US stock market:

The good news for Nvidia has all been released.

Despite the Q3 earnings report exceeding expectations, NVIDIA's stock price failed to maintain its upward momentum. Goldman Sachs commented, “The real good news has not been rewarded, which is usually a bad sign,” indicating that the market had already priced in these positive developments.

Concerns about private lending are rising

Federal Reserve Board member Lisa Cook publicly warned about potential asset valuation vulnerabilities in the private credit sector and the complex connections with the financial system that may pose risks, raising market awareness and widening overnight credit market spreads.

The employment data failed to reassure.

The September non-farm payroll report, while solid, lacks sufficient clarity to guide the Federal Reserve's interest rate decision in December, with the likelihood of a rate cut only slightly increasing, failing to effectively calm market concerns about the interest rate outlook.

Transmission of Cryptocurrency Crash

Bitcoin has fallen below the psychological threshold of $90,000, triggering a broader sell-off of risk assets, with its decline even preceding the sharp drop in U.S. stocks, suggesting that the transmission of risk sentiment may have begun in high-risk areas.

CTA Sell-off Accelerates

Commodity Trading Advisor (CTA) funds were previously in an extremely long position. As the market fell below short-term technical thresholds, CTA systematic selling began to accelerate, exacerbating the selling pressure.

Air Force re-entering

The reversal of market momentum has provided an opportunity for the bears, as short positions begin to become active again, driving stock prices further down.

The overseas market performed poorly.

The weak performance of key Asian tech stocks (such as SK Hynix and SoftBank) has failed to provide a positive external environment to support U.S. stocks.

Market liquidity dries up

Goldman Sachs data shows that the liquidity of the top buy and sell orders for the S&P 500 index has significantly worsened, dropping far below the average level for the year. This zero liquidity state makes the market's ability to absorb sell orders extremely poor, and even small-scale sell-offs can lead to large fluctuations.

Macroeconomic trading dominates the market

The trading volume of exchange-traded funds (ETFs) has surged as a proportion of the total market turnover, indicating that market trading is increasingly driven by a macro perspective and passive funds, rather than the fundamentals of individual stocks, intensifying the downward momentum of the overall trend.

Has the bull market ended?

To answer this question, it might be worth looking at the latest views of Bridgewater Associates founder Ray Dalio from Thursday.

He believes that although investments related to artificial intelligence (AI) are driving the market to form a bubble, investors do not need to rush to liquidate their positions.

The current market conditions are not entirely similar to the bubble peaks witnessed by investors in 1999 and 1929. On the contrary, based on some indicators he monitors, the U.S. market is currently about at 80% of that level.

This does not mean that investors should sell their stocks. “I want to reiterate that many things may still rise before the bubble bursts,” Dalio said.

In our view, the decline on 11·21 was not a sudden “black swan” event, but rather a collective sell-off following highly consistent expectations, which also revealed some key issues.

The real liquidity of the global market is very fragile.

Currently, “Technology + AI” has become a crowded track for global capital, and any small turning point can trigger a chain reaction.

In particular, the increasing number of quantitative trading strategies, ETFs, and passive funds are supporting market liquidity and changing the market structure. The more trading strategies are automated, the easier it is to form a “stampede in the same direction.”

So, in our view, this drop is essentially:

“Structural collapse” caused by high automation trading and capital congestion.

Moreover, an interesting phenomenon is that this decline was led by Bitcoin, marking the first time that cryptocurrency has truly entered the global asset pricing chain.

BTC and ETH are no longer fringe assets; they have become the thermometer of global risk assets and are at the forefront of sentiment.

Based on the above analysis, we believe that the market is not truly entering a bear market, but rather entering a phase of high volatility, where the market needs time to recalibrate its expectations of “growth + interest rates.”

The investment cycle of AI will not end immediately, but the era of “mindless rises” is over. The market will shift from expectation-driven to profit realization, both in the US stock market and the A-shares.

As the risk asset that fell the earliest, had the highest leverage, and the weakest liquidity during this round of decline, cryptocurrencies dropped the most, but rebounds often appear first.