Global Markets Plunge Simultaneously: Who Is the Real Mastermind Behind the Scenes?

Written by: Liam, TechFlow by Deep Tide

Original Title: Global Crash—What Exactly Happened?

November 21, Black Friday.

US stocks plunged, Hong Kong stocks tumbled, A-shares fell in tandem, bitcoin briefly dropped below $86,000, and even safe-haven gold continued to decline.

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

This is not a crisis of a single asset, but a systemic, synchronized downturn in global markets. What exactly happened?

Global Crash—Who Suffered the Most?

After experiencing “Black Monday,” US stocks once again saw a sharp decline.

The Nasdaq 100 index plunged nearly 5% from its intraday high, ultimately closing down 2.4%, with its pullback from the record high set on October 29 expanding to 7.9%. Nvidia’s stock price went from rising over 5% to closing in the red, and $2 trillion evaporated from the market overnight.

Across the ocean, Hong Kong and A-shares were not spared.

The Hang Seng Index fell 2.3%, the Shanghai Composite Index dropped below 3,900 points, with a decline close to 2%.

Of course, the crypto market suffered the most.

Bitcoin fell below $86,000, Ethereum dropped below $2,800, and over 245,000 traders were liquidated in 24 hours, with $930 million wiped out.

From the October high of $126,000, bitcoin began to fall and once dropped below $90,000, not only erasing all gains since 2025, but also declining 9% from the beginning of the year. A wave of panic started to spread in the market.

Even more alarming, gold, which serves as a “hedge” for risk assets, also failed to hold up, falling 0.5% on November 21 and hovering around $4,000 per ounce.

Who Is the Culprit?

The Federal Reserve is the first to blame.

For the past two months, the market has been immersed in expectations of a “rate cut in December,” but the Fed’s sudden shift in stance was like a bucket of cold water poured over all risk assets.

In recent speeches, several Fed officials collectively adopted a rare hawkish tone: inflation is falling slowly, the labor market remains resilient, and further tightening is “not ruled out” if necessary.

This is essentially telling the market:

“A rate cut in December? Wishful thinking.”

CME “FedWatch” data confirms how quickly sentiment collapsed:

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

The sudden shattering of expectations sent US stocks and the crypto market from KTV straight to the ICU.

After the Fed burst the rate cut bubble, the market’s focus shifted to one company: Nvidia.

Nvidia delivered a better-than-expected Q3 earnings report, which should have ignited tech stocks. But even such “perfect” good news couldn’t last long, quickly turning negative and plunging from its highs.

When good news fails to drive prices up, it becomes the biggest bearish signal.

Especially in a cycle of highly valued tech stocks, if good news no longer pushes prices higher, it becomes an opportunity to exit.

At this point, the notorious short-seller Burry, who has been shorting Nvidia, added fuel to the fire.

Burry repeatedly questioned the complex, multi-billion-dollar “circular financing” among Nvidia, OpenAI, Microsoft, Oracle, and other AI companies, stating:

The real end-user demand is laughably small, and almost all customers are funded by their distributors.

Burry has previously issued multiple warnings about the AI bubble, comparing the AI boom to the dot-com bubble.

Goldman Sachs partner John Flood bluntly stated in a client report that a single catalyst is not enough to explain this sharp reversal.

He believes that current market sentiment is deeply scarred, investors have fully entered profit-and-loss protection mode, and are excessively focused on hedging risks.

Goldman Sachs’ trading team summarized nine current factors causing the US stock market’s decline:

Nvidia’s positive news exhausted

Despite a better-than-expected Q3 report, Nvidia’s stock failed to sustain its rally. Goldman Sachs commented, “When truly good news isn’t rewarded, it’s usually a bad sign.” The market had already priced in these positives in advance.

Private credit concerns rising

Federal Reserve Governor Lisa Cook publicly warned of potential asset valuation vulnerabilities in the private credit sector and its complex links to the financial system, which could pose risks. This raised market caution and widened overnight credit market spreads.

Employment data failed to reassure

Although the September non-farm payroll report was solid, it lacked enough clarity to guide the Fed’s December rate decision. The probability of a rate cut only rose slightly, failing to effectively ease market concerns about the rate outlook.

Crypto crash contagion

Bitcoin broke below the psychological threshold of $90,000, triggering a broader sell-off in risk assets. Its decline even preceded the US stock market crash, suggesting that risk sentiment contagion may have started in high-risk sectors.

CTA selling accelerated

Commodity Trading Advisor (CTA) funds were previously extremely long. As the market broke short-term technical thresholds, systematic CTA selling accelerated, intensifying selling pressure.

Short sellers re-entered

The reversal in market momentum provided opportunities for short sellers, with short positions becoming active again and pushing stock prices further down.

Poor performance in overseas markets

Weak performance by key Asian tech stocks (such as SK Hynix and SoftBank) failed to provide a positive external environment for US stocks.

Market liquidity dried up

Goldman Sachs data shows that liquidity in top buy and sell orders for the S&P 500 index has significantly deteriorated, falling well below the annual average. This zero-liquidity state means the market’s ability to absorb sell orders is extremely poor, and even small-scale selling can cause large swings.

Macro trading dominates the market

The proportion of exchange-traded fund (ETF) trading volume in total market turnover has surged, indicating that market trading is increasingly driven by macro perspectives and passive funds rather than individual stock fundamentals, amplifying the overall downward momentum.

Is the Bull Market Over?

To answer this question, let’s first look at the latest view from Bridgewater founder Ray Dalio on Thursday.

He believes that although AI-related investments are driving a market bubble, investors do not need to rush to liquidate their positions.

The current market situation is not exactly like the bubble peaks witnessed by investors in 1999 and 1929. Instead, according to some indicators he tracks, the US market is currently at about 80% of those levels.

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

In our view, the 11/21 drop was not a sudden “black swan” event, but a collective run after highly aligned expectations, which also exposed some key issues.

The real liquidity in global markets is very fragile.

Currently, “Tech + AI” has become the most crowded track for global capital, and any small inflection point can trigger a chain reaction.

Especially now, with more and more quantitative trading strategies, ETFs, and passive funds supporting market liquidity, the market structure has changed. The more automated the trading strategies, the easier it is to form “stampedes in the same direction.”

Therefore, in our view, the essence of this decline is:

A “structural crash” caused by excessive automation in trading and overcrowding of funds.

Additionally, an interesting phenomenon is that this time, bitcoin led the decline, marking the first time crypto has truly entered the global asset pricing chain.

BTC and ETH are no longer marginal assets; they have become thermometers for global risk assets and are at the forefront of market sentiment.

Based on the above analysis, we believe the market has not truly entered a bear market, but rather a phase of high volatility, and it will take time for the market to recalibrate expectations for “growth + interest rates.”

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

As the earliest to fall, with the highest leverage and weakest liquidity among risk assets in this downturn cycle, crypto has dropped the most, but often rebounds first as well.