What is a major crash — Analyzing the global market meltdown by the end of 2025

In mid-November 2025, on a day branded as Black Friday, global financial markets simultaneously plummeted. U.S. stocks sharply declined, Hong Kong stocks and A-shares were sold off at the same time, Bitcoin briefly fell below $86,000, and even gold—considered a safe haven—dropped. All risk assets were squeezed under the same pressure, and this massive crash was not a crisis confined to a specific asset class but a systemic resonance affecting the entire global market. So, what exactly caused this unexpected market collapse?

The Full Scope of Systemic Decline — Simultaneous Selling of Risk Assets

Following “Black Monday,” U.S. stocks experienced another significant downturn. The Nasdaq 100 index plunged nearly 5% from its intraday high, ultimately closing down 2.4%. From its peak on October 29, the decline expanded to 7.9%. Nvidia’s stock initially rose over 5% but eventually turned negative, and the market lost $2 trillion overnight.

Across the ocean, Hong Kong stocks and A-shares were not spared. The Hang Seng Index fell 2.3%, and the Shanghai Composite dropped below 3,900 points, with a decline approaching 2%. The most severe impact was in the cryptocurrency market. Bitcoin broke below $86,000, Ethereum fell below $2,800, and over 245,000 traders faced margin calls totaling $930 million within 24 hours.

From a high of $126,000 in October, Bitcoin’s price fell back, erasing all gains since 2025 and showing a 9% decline from its early-year level. Fear spread across the entire market, and what deepened concerns was that even gold, long regarded as a safe haven, could not withstand the pressure, falling 0.5% to around $4,000 per ounce.

This massive crash was not merely a technical correction but the result of complex pressures acting simultaneously across all risk assets.

The Shift in Federal Reserve Expectations — Rapid Collapse of Rate Cut Anticipations

The first to be noted is the abrupt change 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, but suddenly, multiple Fed officials publicly adopted a hawkish tone. With inflation declining slowly and the labor market remaining strong, their statements—implying that further tightening could not be ruled out—delivered a harsh reality check to markets.

Market participants interpreted this message as: “A rate cut in December? That’s overly optimistic.”

CME’s “FedWatch” data vividly illustrates this shift. The probability of a rate cut, which was 93.7% a month ago, plummeted to just 42.9% within a few weeks. The rapid erosion of expectations caused U.S. stocks and crypto markets to quickly switch from optimism to panic.

Nine Factors Identified by Goldman Sachs — Market Structural Fragility

After the Fed dashed rate cut hopes, Nvidia became the most watched stock. Despite reporting Q3 earnings that beat expectations, even the “perfect” catalyst for tech stocks proved short-lived, turning negative shortly after. The market’s ruthless logic—good news failing to lift stock prices—became evident.

Goldman Sachs partner John Flood, in a client report, stated, “A single catalyst is insufficient to explain this sharp reversal,” pointing instead to a confluence of factors behind the massive crash. Goldman’s trading team identified nine reasons driving the decline:

1. Nvidia’s Good News Exhausted — Q3 earnings beat expectations, but Goldman comments, “Good news not rewarded is a bad sign.” This suggests the market had already priced in these positive results.

2. Growing Concerns Over Private Credit — Fed Governor Lisa Cook publicly warned of vulnerabilities in the private credit sector, with complex links to the financial system, raising risks. The credit market’s spreads widened rapidly.

3. Unclear Employment Data Fails to Clarify — September’s non-farm payrolls remained strong, but were insufficient to definitively guide the December Fed decision. Market doubts about interest rate outlook persisted.

4. Chain Selling in Crypto Markets — Bitcoin broke below the psychological $90,000 level, triggering broader risk asset sell-offs. Notably, the decline in crypto preceded the stock market crash, indicating risk sentiment may have started shifting from high-risk sectors first.

5. Accelerated Selling by CTA (Commodity Trading Advisors) — CTAs were heavily long. When the market broke short-term technical levels, systematic selling accelerated, intensifying downward pressure.

6. Re-entry of the “Air Force” (Short Sellers) — Market shifts activated short positions, further driving down prices.

7. Weakness in Major Asian Tech Firms — The downturns of SK Hynix, SoftBank, and others failed to provide external support for U.S. stocks.

8. Rapid Liquidity Dry-Up — Trading liquidity in top S&P 500 companies deteriorated significantly, falling well below annual averages. Near-zero liquidity means even small sales can cause large price swings.

9. Macro Trading Dominates Micro Fundamentals — ETF trading volume as a share of overall market activity surged, indicating macro and passive flows now dominate, overshadowing individual stock fundamentals.

Liquidity Fragility Revealed — The Role of Automated Trading and ETFs

This crash exposed deep structural issues in the market. Current liquidity levels are not as robust as they seem. The rise of “tech + AI” as a competitive battleground for global capital has made markets vulnerable to even slight turning points, triggering chain reactions.

Particularly concerning is the increasing reliance on quantitative trading strategies, ETFs, and passive funds to support liquidity, fundamentally altering market structure. As trading becomes more automated, synchronized sell-offs in the same direction become easier to trigger. Small triggers can set off algorithmic cascades, accelerating declines beyond human control.

Cryptocurrencies as Market Thermometers — Changing Roles of BTC

An intriguing phenomenon is that this crash was preceded by Bitcoin, marking a shift where cryptocurrencies are now truly integrated into the global asset price formation process. BTC and ETH are no longer peripheral assets but serve as gauges of global risk sentiment, standing at the forefront of market emotion.

Currently, Bitcoin trades around $68,100, and ETH at approximately $1,980 (as of February 2026). Even months after the November 2025 decline, markets remain in a correction phase. This ongoing adjustment suggests the market is entering a genuine bottoming process.

Is the Bull Market Truly Over? — The Nature of Market Correction

To answer this, let’s consider Ray Dalio, founder of Bridgewater Associates. While acknowledging that AI-related investments have created a bubble, he believes investors do not need to rush into selling.

Current market conditions do not fully match the peaks seen in 1999 or 1929. According to some of Dalio’s indicators, the U.S. market is about 80% of those peak levels. This does not mean investors should sell immediately but that “many assets still have room to rise before the bubble bursts,” Dalio suggests.

Fundamentally, this massive crash was not a sudden “Black Swan” event but a collective panic driven by a rapid collapse of highly synchronized expectations. It also revealed critical vulnerabilities: market liquidity is more fragile than imagined, and the high concentration of automated and passive trading has created structural weaknesses.

Looking ahead, the market is likely to enter a high-volatility phase rather than a full-blown bear market. It will take time for expectations around growth and interest rates to recalibrate. While AI investment cycles may not end immediately, the era of “mindless upward movement” is over. The market will shift from expectation-driven to profit-taking.

In this downward cycle, risk assets that fall earliest, with the highest leverage and weakest liquidity—cryptocurrencies—will decline most rapidly, but they often also lead the rebound. This crash should serve as a wake-up call for market participants to deepen their understanding of market structure and strengthen risk management.