#SOL Global big dump, even gold is not spared, what is the reason?

On November 21, the global market experienced a systemic resonant fall, with risk assets such as U.S. stocks, Hong Kong stocks, A-shares, Bitcoin, and gold generally declining along with safe-haven assets.
The main reason is that the Federal Reserve's stance has turned hawkish, causing market expectations for a rate cut in December to plummet from 93.7% to 42.9%, leading to a collapse in risk asset sentiment.
Despite Nvidia releasing better-than-expected Q3 earnings, its stock price plummeted from a high, which the market viewed as "good news fully priced in," intensifying the sell-off in tech stocks.
The big short Burry questions the existence of a "circular financing" bubble in the AI industry, which, along with several factors summarized by Goldman Sachs, has contributed to the fall, including private credit risks, unclear employment data, transmission of the cryptocurrency collapse, accelerated CTA sell-off, and market liquidity depletion.
Ray Dalio, the founder of Bridgewater Associates, believes that the current market is at 80% of bubble levels, but there is no need to rush to liquidate positions. The decline is more due to structural factors rather than the beginning of a bear market.
The market has entered a high volatility phase, the AI investment cycle is not over, but it will shift from expectation-driven to profit realization; cryptocurrencies, as high-risk assets, have fallen the most but may rebound first.
Author: Liam, Deep Tide TechFlow

November 21, Black Friday.

The US stock market plunged, the Hong Kong stock market experienced a big dump, and the A-shares fell in tandem. Bitcoin briefly dropped below $86,000, and even safe-haven gold continued to decline.

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

This is not a crisis of a particular asset, but rather a systemic resonance fall in the global market. What exactly happened?

Global big dump, everyone come to compare misfortunes.
After experiencing "Black Monday", the US stock market has once again encountered a big dump.

The Nasdaq 100 index fell nearly 5% from its intraday high and ultimately closed down 2.4%, with the retracement from the record high set on October 29 widening to 7.9%. Nvidia's stock price rose over 5% at one point before closing down, causing the entire market to evaporate $2 trillion overnight.

The Hong Kong stocks and A-shares across the ocean have not been spared.

The Hang Seng Index fell by 2.3%, and the Shanghai Composite Index dropped below 3900 points, with a fall of nearly 2%.

Of course, the worst has to be the crypto market.

Bitcoin fell below $86,000, Ethereum fell below $2,800, and over 245,000 people were liquidated in 24 hours for $930 million.

Since the peak of $126,000 in October, Bitcoin has fallen and once dropped below $90,000, wiping out all gains since 2025 and down 9% from the beginning of the year, causing a wave of panic to spread through the market.

What's even more frightening is that gold, which serves as a "hedge" for risk assets, also couldn't withstand the pressure, falling 0.5% on November 21, hovering around $4000 per ounce.

Who is the culprit?
The Federal Reserve is the first to be affected.

In the past two months, the market has been immersed in the expectation of "interest rate cuts in December," but the sudden change in attitude from the Federal Reserve has poured cold water on all risk assets.

In recent speeches, several Fed officials have rarely collectively leaned hawkish: inflation is declining slowly, the labor market is resilient, and "further tightening cannot be ruled out if necessary."

This is equivalent to telling the market:

"Interest rate cut in December? You're thinking too much."

CME "Federal Reserve Watch" data confirms the speed of the emotional collapse:

A month ago, there was a 93.7% chance of a rate cut, but now it has fallen to 42.9%.

The sudden collapse of expectations caused the US stock market and the crypto market to instantly transition from KTV to ICU.

After the Federal Reserve burst the interest rate cut expectations, the market's attention is only on one company, Nvidia.

NVIDIA delivered better-than-expected Q3 earnings report, which should have sparked a rally in tech stocks. However, such a "perfect" positive news did not last long and quickly turned negative, plummeting from high levels.

If good news doesn't lead to a rise, it is the biggest bad news.

Especially in the cycle of overvalued technology stocks, if positive news no longer drives up stock prices, it instead becomes an opportunity for exit.

At this time, the major short seller Burry, who has been continuously shorting NVIDIA, also adds fuel to the fire.

Burry has continuously published posts questioning the complex billions of dollars "circular financing" among AI companies such as NVIDIA, OpenAI, Microsoft, and Oracle. He stated:

The actual terminal demand is laughably small, and almost all customers are funded by their dealers.

Burry has previously issued multiple warnings about the AI bubble and compared the AI boom to the internet bubble.

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

He believes that the current market sentiment is battered, and investors have fully entered a profit and loss protection mode, excessively focusing on hedging risks.

Goldman's trading team summarized the nine factors currently causing the fall of U.S. stocks:

NVIDIA's positive outlook has been exhausted.

Despite exceeding expectations in the Q3 financial report, NVIDIA's stock price failed to maintain its upward trend. Goldman Sachs commented, "Real good news not being rewarded is usually a bad sign," indicating that the market had already priced in these positive factors.

Concerns about private lending are rising.

Federal Reserve Board member Lisa Cook has publicly warned of potential asset valuation vulnerabilities in the private credit sector, and that its complex relationships with the financial system could pose risks, raising market vigilance and widening overnight credit market spreads.

The employment data failed to reassure.

Although the September non-farm payroll report was solid, it lacked sufficient clarity to guide the Federal Reserve's interest rate decision in December, with the likelihood of a rate cut only slightly increasing, failing to effectively soothe market concerns about the interest rate outlook.

Transmission of cryptocurrency crash

Bitcoin has fallen below the psychological threshold of 90,000 USD, triggering a broader sell-off of risk assets, with its decline even preceding the big dump in the US stock market, suggesting that the transmission of risk sentiment may have begun in high-risk areas.

CTA sell-off accelerates

Commodity Trading Advisor (CTA) funds were previously in an extremely long position. As the market fell below short-term technical thresholds, CTA systematic selling began to accelerate, intensifying the selling pressure.

Air Force re-entering the market

The reversal of market momentum has provided an opportunity for the bears, and short positions are beginning to become active again, driving the stock price further down.

The overseas market is performing poorly.

The weak performance of key Asian tech stocks (such as SK Hynix and SoftBank) failed to provide a positive external environment support for the US stock market.

Market liquidity dries up

Goldman Sachs data shows that the liquidity size of the top buy and sell orders in the S&P 500 index has significantly deteriorated, falling well below the average level for the year. This zero liquidity state severely hampers the market's ability to absorb sell orders, where even a small-scale sell-off can lead to substantial volatility.

Macro trading dominates the market

The trading volume of Exchange Traded Funds (ETFs) has surged as a proportion of the total market volume, indicating that market transactions are increasingly driven by macro perspectives and passive funds rather than individual stock fundamentals, which has intensified the downward momentum of the overall trend.

Is the bull market over?
To answer this question, it might be helpful to first look at the latest views of Bridgewater Associates founder Ray Dalio from Thursday.

He believes that although investments related to artificial intelligence (AI) are driving the market to form a bubble, investors do not need to rush to liquidate their positions.

The current market conditions are not exactly similar to the bubble peaks witnessed by investors in 1999 and 1929. Instead, based on some indicators he monitors, the U.S. market is currently around 80% of that level.

This does not mean that investors should sell their stocks. "I want to reiterate that many things may still rise before the bubble bursts," Dalio stated.

In our view, the fall on 11·21 was not a sudden "black swan" event, but rather a collective run triggered by highly consistent expectations, which also exposed some key issues.

The real liquidity in the global market is very fragile.

Currently, "Technology + AI" has become a crowded track for global capital, and any small turning point can trigger a chain reaction.

Especially now, an increasing number of quantitative trading strategies, ETFs, and passive funds are supporting market liquidity, which has also changed market structure. The more trading strategies are automated, the easier it is to form a "run in the same direction."

Therefore, in our view, this fall is essentially:

"Structural big dump" caused by automated trading and excessive capital congestion.

In addition, an interesting phenomenon is that this fall was led by Bitcoin, marking the first time that cryptocurrency has truly entered the global asset pricing chain.

BTC and ETH are no longer fringe assets; they have become the thermometer of global risk assets and are at the forefront of sentiment.

Based on the above analysis, we believe that the market has not truly entered a bear market, but rather has entered a phase of high volatility, and the market needs time to recalibrate the expectations of "growth + interest rates."

The investment cycle of AI will not end immediately, but the era of "mindless rising" is over. The market will shift from expectation-driven to profit realization, both in the U.S. stock market and A-shares.

As the risk asset that experienced the earliest fall, has the highest leverage, and the weakest liquidity in this round of decline, cryptocurrencies have seen the most significant drops, but rebounds often occur first.