Global crash: even gold is not spared. What is the reason?

Author: Liam, TechFlow

November 21, Black Friday.

U.S. stocks plunged, Hong Kong stocks tumbled, A-shares declined in sync, Bitcoin briefly fell below $86,000, and even safe-haven gold continued to drop.

All risk assets seemed to be suppressed by an invisible hand, collapsing simultaneously.

This isn’t a crisis of a single asset, but a systematic global market downturn resonating across the board. What exactly happened?

Global Crash: Who’s Suffering Most?

After experiencing “Black Monday,” U.S. stocks took another plunge.

The Nasdaq 100 Index plummeted nearly 5% from its intraday high, ultimately closing down 2.4%, widening the pullback from its October 29 record high to 7.9%. Nvidia’s stock price went from rising over 5% to closing down, wiping out $2 trillion from the entire market overnight.

Across the ocean, Hong Kong and A-shares weren’t spared.

The Hang Seng Index fell 2.3%, the Shanghai Composite Index broke below 3,900 points, dropping nearly 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 for $930 million in 24 hours.

Since falling from the October high of $126,000 and briefly dipping below $90,000, Bitcoin not only erased all its gains since 2025, but also fell 9% from its price at the start of the year. A wave of panic began to spread through the market.

Even more alarming, gold, often used as a hedge against risk, couldn’t hold up either, dropping 0.5% on November 21 and hovering around $4,000 per ounce.

Who’s the Culprit?

The Federal Reserve stands out as the main culprit.

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

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

This essentially told the market:

“December rate cut? You’re overthinking it.”

CME “FedWatch” data confirmed how quickly sentiment collapsed:

A month ago, there was a 93.7% probability of a rate cut, now it’s down to 42.9%.

The sudden shattering of expectations sent U.S. stocks and crypto markets from a KTV party 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 this “perfect” positive news couldn’t last; it quickly reversed and plunged from its highs.

When good news fails to raise prices, that’s the biggest bearish signal.

Especially in a cycle of high-valuation tech stocks, if good news no longer boosts prices, it becomes an exit opportunity.

At this point, notorious bear Burry, who has been shorting Nvidia, poured fuel on the fire.

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

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

Burry has repeatedly warned about the AI bubble and has compared the AI boom to the dot-com bubble.

Goldman Sachs partner John Flood bluntly stated in a client report that no single catalyst can fully explain this dramatic reversal.

He believes that the market is currently deeply scarred, with investors fully in profit-and-loss protection mode and overly focused on hedging risks.

Goldman’s trading team summarized nine factors currently driving the U.S. stock market down:

Nvidia’s Good News Priced In

Despite Q3 earnings beating expectations, Nvidia’s stock couldn’t sustain its rally. Goldman commented, “When genuinely good news doesn’t get rewarded, it’s usually a bad sign.” The market had already priced in these positives.

Private Credit Concerns Rising

Fed Governor Lisa Cook publicly warned of potential asset valuation vulnerabilities in the private credit sector and its complex links to the financial system, sparking market caution. Overnight credit market spreads widened.

Employment Data Fails to Reassure

While the September non-farm payroll report was solid, it wasn’t clear enough to guide the Fed’s December rate decision. The probability of a rate cut only rose slightly, failing to ease market concerns over interest rate prospects.

Crypto Crash Spillover

Bitcoin breaking below the $90,000 psychological level triggered wider risk asset sell-offs. Its decline even preceded the U.S. stock crash, suggesting that risk-off sentiment may have started in high-risk sectors.

CTA Selling Accelerates

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

Bears Re-enter the Market

The reversal in market momentum gave short-sellers an opportunity. Short positions became active again, driving further price declines.

Poor Performance Overseas

Weakness among major Asian tech stocks (such as SK Hynix and SoftBank) failed to provide a positive external environment for U.S. equities.

Market Liquidity Dries Up

Goldman data shows that S&P 500 top-level order book liquidity has deteriorated significantly, dropping well below the annual average. In this zero-liquidity state, the market’s capacity to absorb sell orders is extremely poor, meaning even small sell-offs can cause large volatility.

Macro Trading Dominates

The proportion of ETF trading volume to total market volume has surged, indicating that market activity is increasingly driven by a macro perspective and passive funds rather than individual stock fundamentals, further intensifying the overall downward trend.

Is the Bull Market Over?

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

He believes that although AI-related investments are fueling a market bubble, investors don’t need to rush to liquidate.

The current market isn’t exactly like the bubble peaks investors saw in 1999 or 1929. On the contrary, according to some indicators he tracks, the U.S. market is currently about 80% of that level.

This doesn’t mean investors should sell stocks. “Let me emphasize: before the bubble bursts, a lot of things can still go up,” Dalio said.

In our view, the 11/21 drop wasn’t a sudden “black swan” event, but rather a collective panic after highly uniform expectations, exposing some key issues.

Global market liquidity is extremely fragile.

Currently, “Tech + AI” has become the world’s most crowded investment track, and any small turning point can trigger a chain reaction.

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

So, in our view, the essence of this downturn is:

A “structural crash” caused by overly crowded automated trading and capital flows.

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

BTC and ETH are no longer marginal assets; they’ve become the thermometer for global risk assets, and are at the forefront of market sentiment.

Based on the above analysis, we believe the market hasn’t truly entered a bear market, but rather has entered a high-volatility phase, where the market needs time to recalibrate expectations for “growth + interest rates.”

The AI investment cycle won’t end immediately, but the era of “mindless gains” is over. From now on, the market will shift from expectations-driven to profit-delivery, both in U.S. and Chinese markets.

As the earliest to fall and the most leveraged and illiquid risk asset in this downturn, crypto fell the hardest—but it often also rebounds first.