The structural crisis of the global market revealed by the major crash in November 2024

November 21st, a day known as Black Friday, saw the world’s markets simultaneously suffer a major crash. U.S. stocks plummeted sharply, Hong Kong stocks and A-shares also declined at the same time, and Bitcoin temporarily fell below $86,000. This massive crash was not merely an issue of a single asset class but a systemic chain reaction affecting the entire global financial market, as if an invisible hand was squeezing everything at once. So, what exactly happened?

$2 Trillion Disappeared Overnight: The Chain Reaction of Market-Wide Collapse

The most notable decline was in the U.S. market, particularly the Nasdaq 100 index. It dropped nearly 5% from its intraday high, ending the day down 2.4%. From its high on October 29, the decline had already expanded to 7.9%. On this day, Nvidia’s stock also rose over 5% before sharply falling back by the close. Overall, $2 trillion evaporated overnight across the markets.

Across the Pacific, Hong Kong’s Hang Seng Index fell 2.3%, and the Shanghai Composite Index dropped below 3,900 points, recording nearly a 2% decline. The most tragic was the cryptocurrency market. Bitcoin fell below $86,000, and Ethereum dipped under $2,800. Over 245,000 traders were liquidated within 24 hours, totaling $930 million.

Bitcoin, which had fallen from its October high of $126,000, wiped out all gains made since 2025 and turned a 9% loss for the year-to-date. Fear began to spread throughout the entire market. Even traditional safe havens like gold could not withstand the pressure, falling 0.5% on November 21 to around $4,000 per ounce. The strength of this wave of crash underscores how systemic and pervasive the panic was.

The Shock of the Fed Turnaround: Market Fear Fueled by Expectations

The primary trigger for this crash was the shift in the stance of the U.S. Federal Reserve (Fed). For the past two months, markets had been betting on a “rate cut in December.” However, statements from Fed officials dashed those hopes. Several officials unexpectedly adopted a hawkish tone, stating that due to slow inflation decline and a strong labor market, they “do not rule out further tightening if necessary.”

This was essentially a message to the market: “A rate cut in December? Don’t count on it.” CME’s “FedWatch” data vividly illustrated this collapse of expectations. A month ago, the probability of a rate cut was 93.7%, but now it has fallen to 42.9%. The sudden loss of hope caused U.S. stocks and crypto markets to rapidly shift from KTV (Killer to Victim) to ICU (Intensive Care Unit).

Immediately after the Fed dashed hopes for a rate cut, Nvidia became the focus. The company announced Q3 earnings that exceeded expectations, which should have been bullish for tech stocks. Yet, even this “perfect” good news was short-lived, quickly turning into red and plunging from its high. Good news no longer buoying stock prices is the worst signal. Especially for highly-rated tech stocks, this situation becomes the best opportunity for short sellers to exit.

Following this, a major short seller, Barry, continued to post provocative comments, fueling the fire. He questioned the complex, multi-billion-dollar “circulating loans” among AI companies like Nvidia, OpenAI, Microsoft, and Oracle, claiming: “Real end-user demand is laughably small, and almost all customers are funded by distributors.” Barry warned of an AI bubble, equating its prosperity with the dot-com bubble.

Hidden Culprit: Automated Trading and Liquidity Dry-Up

Goldman Sachs partner John Flatt stated in a client report that “a single catalyst is insufficient to explain such a sharp reversal.” He pointed out that market sentiment was already battered, with investors fully in profit-taking mode and overly focused on hedge risks.

Goldman’s trading team summarized several factors behind the current U.S. stock decline: Nvidia’s post-earnings exhaustion, concerns in the private credit sector, uncertainty in employment data, spillover from crypto declines, accelerated selling by CTAs (Commodity Trading Advisors), re-entry of short sellers, weakness in Asian tech stocks, and most critically, liquidity drought.

The liquidity of the S&P 500 index had significantly deteriorated, falling well below its average level for the year. In such a liquidity crunch, the market’s capacity to absorb sell orders is severely limited. Even small sales can trigger large swings. Meanwhile, the rising proportion of ETF trading volume relative to overall market activity indicates that macro trends and passive funds are increasingly dominating the market, rather than individual stock fundamentals.

Bitcoin Frontline: Cryptos as Indicators of Risk Asset Temperatures

An intriguing phenomenon is that this crash was preceded by a decline in Bitcoin. This marks the first time that cryptocurrencies have been truly integrated into the global asset pricing chain. Bitcoin and Ethereum are no longer peripheral assets but have become gauges of global risk sentiment, standing at the forefront of market psychology.

As of February 2026, about three months after the November 21 crash, Bitcoin has recovered to $68,390, and Ethereum to $1,970. The rebound from November’s lows has been confirmed, but whether this pattern signals a true bottom or is just the beginning remains to be seen.

End of a Bull Market or Just a Correction? Experts’ Perspectives

To understand this phase, attention should be paid to the latest insights from renowned investor Ray Dalio. Dalio acknowledges that AI-related investments are indeed forming a bubble but believes investors do not need to rush into selling. The current market conditions are not exactly like the peaks of 1999 or 1929. Instead, based on several indicators, the U.S. market is currently around 80% of those peak levels.

Dalio states: “Before a bubble bursts, many assets can still go higher.” This suggests that the recent crash is more likely a market correction with high volatility rather than the start of a bear market.

In our view, the November 21 crash was not an unpredictable “Black Swan” but a collective panic following highly synchronized expectations, exposing the structural issues in the global markets. Essentially, it was a “structural collapse” driven by excessive automation and capital concentration.

As market structures evolve, automated trading strategies tend to create synchronized sell-offs in the same direction. Especially now, with “technology + AI” becoming a fierce battleground for global capital, even small turning points can trigger chain reactions.

In conclusion, during this crash cycle, the riskiest assets—cryptocurrencies—fell the fastest, with the highest leverage and weakest liquidity. Historically, such risk assets often lead the rebound.

While the AI investment cycle may not end immediately, the era of “mindless ascent” is definitely over. Markets will shift from expectation-driven to profit-taking phases. U.S. stocks and A-shares are no exception. It’s likely that the market has not entered a true bear market but has instead moved into a high-volatility phase, requiring time to readjust expectations around “growth + interest rates.”