The Market Crash of Fall 2025: When Automation Meets Reality

In November 2025, global markets experienced a synchronized crash that shook investors worldwide. It was not an isolated event related to a single asset but a market collapse that simultaneously affected U.S. stocks, Asian markets, and cryptocurrencies. Bitcoin plummeted from a high of $126,000 to nearly $86,000, while Ethereum fell below $2,800. Even gold, traditionally considered a safe haven, couldn’t withstand the blow. Today, in March 2026, prices remain significantly depressed: Bitcoin is at $74,360 (up 3.71% in the last 24 hours) and Ethereum at $2,350 (+10.50% in 24 hours), highlighting how the impact of that market crash continues to influence investor psychology.

An Unprecedented Simultaneous Fall: Risk Assets Under Attack

November 21, 2025, has been dubbed the new “Black Friday” of markets. The Nasdaq 100 dropped nearly 5% from its intraday peak, closing down 2.4%. Since its all-time high on October 29, it had already retraced 7.9%. But the most striking data was the overnight capital evaporation: Nvidia’s collapse wiped out about $2 trillion in market value.

On the other side of the Pacific, things weren’t better. The Hang Seng index fell 2.3%, and the Shanghai Composite dropped below 3,900 points, losing nearly 2%. However, the most violent collapse was in the cryptocurrency market, known for its volatility. In just 24 hours, over 245,000 traders were liquidated for a total of $930 million. Bitcoin, which had hit $126,000 in October, erased all gains made since the start of the year and registered an overall 9% decline since January.

What’s striking is that even gold, considered the ultimate safe haven during crises, did not hold: on November 21, it lost 0.5%, fluctuating around $4,000 per ounce. An alarming sign suggesting this was not just a correction but a true risk aversion contagion affecting all assets, regardless of their nature.

The True Culprits Behind the Collapse: From the Fed to Excess Automation

When looking for the culprits of this market crash, the Federal Reserve immediately comes to mind. In the months leading up to the event, the market was fully immersed in a single narrative: a rate cut in December 2025. According to CME FedWatch data, the probability of a cut had risen to 93.7%.

Then, suddenly, everything changed. Fed officials began sending much more hawkish signals. Inflation was falling more slowly than expected, the labor market remained resilient, and they suggested that further tightening might be necessary. The message was clear: “Rate cut in December? You’re too optimistic.” The probability of a cut plummeted from 93.7% to 42.9% within a few weeks.

This abrupt shift in expectations triggered a chain reaction. The market, which had been celebrating for months on hopes of lower rates, suddenly faced entirely new risks.

NVIDIA and the AI Bubble: When Good News Turns Bad

After the Fed’s change in tone, market focus centered on one company: Nvidia. The chip giant reported Q3 2025 results exceeding expectations. Normally, such a stellar quarter would have propelled the tech sector higher.

Instead, the opposite happened. Nvidia initially gained over 5%, but then reversed course, closing in the red. This is one of the strongest bearish signals: when good news fails to push prices higher, it indicates that the market has already priced in the benefits. In an overleveraged sector like AI technology, good news quickly becomes an opportunity to take profits and exit.

Michael Burry, the well-known short seller who had already criticized the sector, seized the moment to intensify his attacks, raising doubts about what he called a “circular financing” of billions of dollars among Nvidia, OpenAI, Microsoft, Oracle, and other AI companies. He stated that the actual end demand was “ridiculously low,” as almost all clients were financed by the same dealers selling them chips.

Nine Factors Accelerating the Market Collapse

John Flood of Goldman Sachs publicly acknowledged that a single factor was insufficient to explain such a severe crash. The bank’s trading team identified nine competing factors:

1. The exhaustion of Nvidia’s bullish run. Despite strong results, the stock failed to maintain momentum. As Goldman commented: “Real good news that doesn’t elicit a reaction is usually a bad sign.”

2. Growing concerns over private credit. Federal Reserve Governor Lisa Cook publicly warned about valuation vulnerabilities in the private credit sector and its dangerous interconnectedness with the financial system.

3. Uncertain employment data. Although the September non-farm payroll report was solid, it did not provide enough clarity for Fed rate decisions in December.

4. The contagion from cryptocurrencies. Bitcoin fell below the psychological $90,000 level, triggering a broader sell-off of risk assets. Notably, the crypto crash preceded the stock market decline.

5. Accelerating CTA selling. Commodity Trading Advisor funds were heavily long. When the market crossed key technical levels, their systematic selling accelerated, adding downward pressure.

6. The return of bears. The market reversal created an opportunity for bearish traders, with short positions reactivating and pushing prices further down.

7. Weak performance of foreign markets. Major Asian tech stocks like SK Hynix and SoftBank underperformed, failing to support the U.S. market.

8. Structural fragility of market liquidity. Goldman Sachs data revealed a dramatic deterioration in liquidity, with bid-ask spreads of key S&P 500 stocks well below the annual average. In liquidity drought conditions, even modest sales can cause extreme swings.

9. The dominance of macro and passive trading. The volume of ETF trading as a percentage of total market volume soared, indicating that markets are increasingly driven by macro decisions and passive funds rather than company fundamentals.

Is the Bull Market Truly Over? A Long-Term Perspective

To understand whether this market crash marked the end of the bull era, it’s helpful to consider insights from Ray Dalio, founder of Bridgewater Associates. In his recent commentary, Dalio offered a balanced view: while investments in AI may have indeed created bubble-like elements, investors should not rush to liquidate their positions.

According to his analysis, the current situation is not entirely comparable to the bubble peaks of 1999 (dot-com bubble) or 1929. For many indicators he monitors, the U.S. market is currently around 80% of those extreme levels. “What I want to emphasize,” Dalio said, “is that many things can still go higher before a bubble bursts.”

Our assessment is that the November 2025 crash was not a sudden “Black Swan” event but rather a collective correction after a phase of overly optimistic expectations. However, it also highlighted critical structural issues:

Global market liquidity is extraordinarily fragile. With “Tech + AI” becoming the preferred sector for global funds, even the smallest change in sentiment can trigger chain reactions. Quantitative trading strategies, ETFs, and passive funds, while providing apparent liquidity, have fundamentally altered market structure. When these strategies move in unison, they create “coordinated escapes,” greatly amplifying price movements.

This market crash was essentially a “structural collapse” driven by excessive automation in trading and overcrowding of funds in a few sectors. It is not a sign of an imminent economic recession but rather a redefinition of market structure.

A particularly interesting phenomenon is that this crash was led by Bitcoin. For the first time in history, cryptocurrencies have truly integrated into the global asset pricing chain. Bitcoin and Ethereum are no longer marginal assets; they have become the barometers of global risk assets, reacting first and most sensitively to market emotions.

The Next Phase

Based on this analysis, we believe the market has not entered a permanent bear phase but is instead in a period of high volatility, requiring time to recalibrate growth and interest rate expectations. The AI investment cycle will not end abruptly, but the era of “irrational rallies” is clearly over. The market will shift from a regime driven by optimistic expectations to one focused on profit realization.

This regime change applies both to the U.S. stock market and to Chinese A-shares. Regarding cryptocurrencies, as the riskiest assets that experienced the sharpest decline, with the highest leverage and most fragile liquidity during this downturn, Bitcoin and Ethereum suffered the most significant drops. However, historically, these assets tend to be among the first to rebound when sentiment begins to stabilize, as early March 2026 data suggests.