Bitcoin, stocks, and gold all decline simultaneously—psychological chain reaction collapse of the market system

Black Friday on November 21 was not just a market decline but a “collective panic” where risk assets worldwide were pushed in the same direction. The Nasdaq 100 experienced a sharp 5% drop during the day, Hong Kong stocks fell by 2.3%, and A-shares declined nearly 2%. The most dramatic was the crypto market—Bitcoin temporarily dipped below $86,000 and is now around 92.83K (24-hour change: -2.40%). Ethereum also dropped 3.06% to the level of 3.21K. Over 245,000 investors experienced a $930 million liquidation within 24 hours.

Why did it all collapse at once? Not a single cause

What the market was craving was a “rate cut in December.” The overall expectation for US stocks plummeted from 93.7% to 42.9% in just one month—this rapid psychological reversal dealt a cold shower to all systems.

Multiple Fed officials clarified hawkish stances simultaneously: “Inflation is decreasing slowly, and the labor market remains strong, so further rate hikes are not ruled out.” This statement shattered the collective market expectations.

When good news stops working, the real crisis begins

Nvidia announced quarterly earnings exceeding expectations. However, even “perfect” news quickly turned into losses, plunging from highs. In the high valuation cycle of tech stocks, good news failing to push stock prices higher becomes the biggest bad news—meaning investors realize “it’s time to escape.”

A major short seller, Barry Shiller, struck at this timing. He questioned the complex “circulating credit” structures among major AI companies like Nvidia, OpenAI, Microsoft, and Oracle, pointing out: The true end-user demand is incredibly small, and almost all customers are funded by distributors.

Nine simultaneous pressures: problems with the market structure itself

Goldman Sachs’ analysis team clearly states that the essence of this decline cannot be explained by a single catalyst. They listed nine factors:

Concerns in the private credit market (potential risks officially warned by Fed officials), ambiguity in employment data, accelerated automatic selling by CTAs, re-entry of short sellers, weakness in Asian tech stocks, sharp deterioration in liquidity at the top of the S&P 500, and structural changes due to a surge in ETF trading.

Liquidity depletion is particularly severe. In an environment close to zero liquidity, even small sell orders can cause significant price swings.

The crypto market has risen to the status of a “thermometer”

An interesting phenomenon is that the decline was led by Bitcoin. Once considered a peripheral asset, cryptocurrencies are now a sentiment barometer for all global risk assets. As BTC and ETH began to fall, US stocks followed—indicating that cryptocurrencies have, for the first time, truly become embedded in the global asset pricing mechanism.

Is the bull market over? The answer is no, but a correction is inevitable

Ray Dalio (founder of Bridgewater) admits that AI-related investments are forming a bubble but argues that investors do not need to rush to sell. According to his analysis, the US market is currently at about 80% of the bubble peak levels seen in 1929 and 1999, and even before the bubble bursts, many assets still have room to rise.

However, the direction of the market is clear. It is entering a phase of readjusting expectations for “growth + interest rates,” shifting investors from expectation-driven to profit-taking. The market is not in a true bear phase but is transitioning into a high-volatility environment.

The assets that fall the fastest will rebound first

Crypto assets with the highest leverage and most fragile liquidity experienced the steepest declines, but historically, the first rebounds often come from the crypto market. For investors who understand the structural issues deeply, this decline is both an opportunity for adjustment and a signal to reevaluate risk assets overall.

What’s crucial is that the era of “mindless growth” has ended. The AI investment cycle is not over yet, but market participants will now need to make decisions based on data.