Global stock markets experience their worst week since April: AI stocks drag down risk assets, Bitcoin hits $82,000

November 21, 2025, global stock markets are experiencing their worst weekly decline since April, with the MSCI World Index plummeting 3% this week, Asian stock markets falling 1.7%, and the S&P 500 retreating 5% from recent highs. The sell-off stems from investor concerns over overvalued AI stocks and massive investment returns, coupled with ongoing uncertainty about the Federal Reserve’s December rate cut. Amidst the turbulence in traditional risk assets, Bitcoin broke below the critical $86,000 level, briefly dropping to $82,000, and has since rebounded above $84,000.

Meanwhile, MicroStrategy faces the risk of being delisted from major indices, with potential passive fund outflows reaching up to $9 billion, highlighting the increasing correlation between digital assets and traditional financial markets.

Global Market Overview: Risk Assets Undergoing a Broad Sell-Off

The third week of November 2025 is set to become a landmark moment for global risk asset markets, with the MSCI World Index dropping 3% in a single week—the largest since the turmoil caused by Trump tariffs on April 4. This wave of selling exhibits cross-market and cross-asset characteristics, affecting everything from U.S. tech stocks to emerging Asian markets, cryptocurrencies, and commodities—all caught in the downturn. Major Wall Street indexes closed Thursday with declines across the board, with the S&P 500 experiencing a 3.6% intraday reversal—the biggest since the April tariff crisis—highlighting a sharp deterioration in market sentiment.

Asian markets performed especially poorly, with regional indices down 1.7%, marking their weakest weekly performance since April. Japan was in focus as Prime Minister Sanae Takaichi’s cabinet approved the largest fiscal stimulus package since the pandemic, involving JPY 17.7 trillion (about $112 billion) in general account spending. However, this fiscal boost failed to assuage concerns over yen depreciation. Japan’s Finance Minister, in a rare direct mention of “intervention,” appeared skeptical of immediate action, and the yen briefly strengthened before falling back again.

U.S. market sentiment was somewhat stabilized early Friday, with S&P 500 futures pointing to modest gains, but this technical rebound cannot hide the overall negative trend. The Treasury market was volatile, with the 10-year yield rising 1 basis point to 4.09%, reflecting mixed investor sentiment toward fixed-income assets. European equities continued their decline, consistent with global risk aversion. Charlotte Daughtrey, Head of Equity Strategy at Federated Hermes Ltd., noted: “With increasing doubts about the sustainability of the AI boom, markets have been under pressure this week. Although volatility has risen, most analysts see this correction as a phase of adjustment rather than the start of a prolonged downturn.”

Key Data on Global Markets:

MSCI World Weekly Change: -3% (worst since April)

Asia Stock Market Weekly Change: -1.7%

S&P 500 off its peak: -5%

Cboe Volatility Index (VIX): 26.42 (highest since April)

Bitcoin Price: fell below $86,000

10-year U.S. Treasury Yield: 4.09% (+1 basis point)

The sharp increase in market volatility coincides with a critical options expiration, with approximately $3.1 trillion in notional value of options expiring on Friday, which could amplify price swings. Chris Murphy, Co-Head of Derivatives Strategies at Susquehanna International Group, noted Thursday evening that while the volatility index remains elevated, it has not reached recent high levels, indicating “concerns about volatility are intensifying but have not yet reached extreme levels.” Historical data offers some hope—Goldman Sachs partner John Flood pointed out that since 1957, there have been eight instances where the S&P 500 opened up more than 1% but closed lower, with the following day and week averaging gains of at least 2.3%, and a one-month average increase of 4.7%.

AI Stock Bubble Concerns and Tech Spending Worries

The core driver behind this global sell-off is concerns over overvaluation in AI stocks, even as industry leader Nvidia reported optimistic guidance, which did not prevent declines. Nvidia’s stock fell 3.2% Thursday, reflecting deep investor doubts about whether massive AI investments by tech giants will generate commensurate returns. This sentiment spread across the entire tech sector, turning previously leading stocks into major casualties of the sell-off.

Valuation pressures in tech combined with macroeconomic uncertainty create a dangerous cocktail. Recent remarks from Federal Reserve officials reveal internal disagreements about whether to cut rates again in December. Fed Governor Michael Barr stated that with inflation still above target, the central bank needs to be cautious about further rate reductions. Cleveland Fed President Beth Hammack warned that easing to support the labor market could prolong inflation above target and increase financial stability risks. Chicago Fed President Austan Goolsbee expressed cautiousness about a December rate cut, hinting at ongoing debate.

Economic data on corporate activity deepens market worries. A delayed government employment report released Thursday showed September U.S. job growth accelerated to 119,000 new jobs, well above the forecast of 50,000, while the unemployment rate rose to 4.4%, a new high since 2021. This conflicting picture suggests the labor market may be more fragile than the data indicates, with some signs of stabilization before the government shutdown, but not enough to ease concerns about economic health. Nick Twidale, Chief Market Strategist at AT Global Markets, commented: “Concerns over valuations combined with the complex employment data have dominated trading sentiment. It feels like we’re in a ‘sell into strength’ environment, with a peak already formed before year-end.”

Corporate activity also reflects caution. Despite Abbott Laboratories agreeing to acquire cancer screening firm Exact Sciences Corp. for about $21 billion—its largest healthcare deal in two years—and GE HealthCare Technologies Inc. purchasing medical imaging software maker Intelerad for $2.3 billion, market reactions have been tepid. South Korean entertainment company Pinkfong Co. saw its stock plunge to 35,050 KRW on Friday, down 7.7% from the IPO price, highlighting investor skepticism about high-growth stories.

MicroStrategy’s Index Crisis: $9 Billion in Passive Funds at Risk

Amid global market turbulence, MicroStrategy (rebranded as Strategy Inc.) faces a unique and severe challenge—possible delisting from major indices, risking passive fund outflows of up to $9 billion. MSCI is consulting on new standards that would exclude companies holding digital assets exceeding 50% of total assets and primarily engaged in core business activities. The proposal stems from some clients’ view that such companies resemble investment funds more than qualified index constituents.

This threat poses a fundamental challenge to MicroStrategy’s business model. As of mid-November, the company held 649,870 BTC with an average cost of $74,430 per coin, close to current market prices, leaving little profit margin. Its market cap, based on basic shares, is around $51 billion, fully diluted at about $57 billion, with an enterprise value of approximately $66 billion. J.P. Morgan analysis indicates that simply being removed from MSCI could trigger $2.8 billion in passive fund outflows; if other index providers follow suit, total outflows could reach $8.8 billion.

Timeline for MicroStrategy’s potential index removal:

Current holdings: 649,870 BTC

Average cost: $74,430

MSCI consultation initiation: September 2025

Final decision date: January 15, 2026

Potential outflows: $2.8B to $8.8B

Affected indices: MSCI USA, NASDAQ 100, CRSP, Russell, etc.

The timing of this crisis is particularly unfavorable. MicroStrategy’s stock has fallen 60% from recent highs, eroding the valuation premium supporting its “issue shares — buy Bitcoin” strategy. Its market-to-net-asset value ratio is now near parity, reflecting waning investor confidence in Michael Saylor’s “sell stocks, buy Bitcoin, repeat” flywheel. This premium is crucial as the company issues equity and convertible bonds to fund Bitcoin purchases, aiming for a stock price above its Bitcoin holdings’ value. Losing this premium would weaken its business model, as investors could directly buy Bitcoin instead.

Rising financing costs worsen the predicament. MicroStrategy issued convertible bonds on more favorable terms early 2025. With Bitcoin underperforming, the company faces margin pressure. As of mid-November, its Bitcoin holdings show a 15.81% unrealized profit, but if Bitcoin nears $74,430 (break-even), that profit margin shrinks. These challenges test MicroStrategy’s resilience as a flagship Bitcoin treasury company and serve as a cautionary example for similar firms like MARA Holdings, Metaplanet Inc., and Bitcoin Standard Treasury.

Crypto Market Linkages: Bitcoin Breaks Below $86,000

Turbulence in traditional markets has rapidly transmitted to cryptocurrencies, with Bitcoin breaking below $86,000, aligning with the decline in global risk assets. This linkage underscores the maturing nature of the crypto market—it is no longer an isolated island disconnected from traditional finance but a highly sensitive indicator of global risk appetite shifts. Garfield Reynolds, Bloomberg strategist, noted: “Bitcoin hitting new lows has become almost routine now, which could intensify the declines already seen in Asian equities.”

Bitcoin’s recent performance shows a marked increase in correlation with stocks, especially tech stocks. When AI stocks are sold off, crypto markets tend to react almost simultaneously, indicating that investor groups and capital flows behind both assets are converging. This correlation is especially pronounced during liquidity crunches, as investors tend to cut risk exposure across the board rather than selectively de-risk. Chainalysis data reveal that in the third week of November, total crypto trading volume declined 23% MoM, coinciding with shrinking stock trading volumes.

Leverage adjustments in derivatives markets further amplify downward pressure. Data from CoinGlass shows nearly $958 million of liquidations across the entire market in the past 24 hours, with over 70% of positions being long. Open interest decreased by 7% to about $133 billion, indicating traders are actively reducing risk. Bitcoin futures premium (contango) has narrowed significantly, signaling market caution about near-term prospects. Options skew indicators also show increased demand for downside protection, with put options becoming more expensive relative to calls.

Market structure shifts play a key role in this correction. Market makers, still recovering from balance sheet issues caused by October’s flash crash, have limited capacity to provide liquidity, resulting in wider spreads and thinner order books, where even small trades can cause outsized price moves. Tom Lee previously warned that market maker liquidity recovery could take up to eight weeks; with only six weeks passed, the vulnerability remains. This structural fragility makes the crypto market more susceptible to external shocks.

Federal Reserve Policy Dilemmas and Macroeconomic Uncertainty

Uncertainty surrounding the Federal Reserve’s policy path continues to cast a shadow over global markets. Internal disagreements among policymakers about whether to cut rates again in December hinder clear expectation formation. Minutes from the latest meeting show Fed officials split into three camps—most favor a cautious approach supporting a rate cut if conditions warrant, some want to wait for more data, and a minority prefer to keep rates unchanged through the remainder of the year.

Labor market data provide mixed signals. The September employment report showed non-farm payrolls increased by 119,000—well above the forecast of 50,000—yet the unemployment rate rose to 4.4%, a new high since 2021. This contradictory data complicates Fed decisions—robust job gains suggest resilience, reducing urgency for rate cuts, while rising unemployment hints at fragility. Further complicating the picture, the Bureau of Labor Statistics announced it will not release a separate October employment report but will merge the data into November’s release.

Interest rate futures reflect this uncertainty. After the September jobs report, the probability of a December rate cut rose from 30% to 43%, showing traders remain uncertain about the Fed’s next move. For risk assets, this environment is particularly challenging—neither fully risk-averse, which would drive flows into safe assets, nor fully easing, which would encourage risk-taking. Instead, markets are in a “no man’s land,” swinging on each new data point rather than following a clear trend.

Diverging monetary policies among global central banks add to the complexity. The Bank of Japan continues its ultra-loose stance, while the European Central Bank faces a delicate balancing act between economic growth and inflation pressures. This policy divergence creates arbitrage opportunities but also increases unpredictability in global capital flows. The US dollar index has strengthened amid uncertainty, exerting additional downward pressure on dollar-denominated crypto assets. Historically, during periods of unclear Fed policy, assets like Bitcoin tend to underperform, consistent with current conditions.

Market Outlook and Strategic Adjustments

In this environment, investors should reassess asset allocations and risk management strategies. Historical cycles show that 20-30% corrections in mid-bull markets are common, but distinguishing between a correction and a trend reversal is crucial. VanEck’s longer-term projections still anticipate a bull market peak in Q1 2026, with new highs expected by the end of 2025—especially as stablecoin supply hits record highs, injecting liquidity into the ecosystem.

Technical indicators offer some optimism for equities. Despite the S&P 500 being down 5% from recent highs, the 200-day moving average remains a key support level. Goldman Sachs data suggest that similar technical conditions in the past have resulted in an average 4.7% rally over the next month, which could set the stage for a year-end rebound. However, investors should monitor the volatility index; if it remains persistently above 25, it indicates ongoing market stress.

The recovery path for cryptocurrencies may be more complex. Chainalysis data show that while long-term holder supply has decreased somewhat, it remains high, indicating conviction among holders has not waned significantly. Bitcoin’s realized price (the total market cost basis) is currently around $79,000, serving as an important support level. Ki Young Ju, CEO of CryptoQuant, noted that for long-term holders, current levels present accumulation opportunities. Despite short-term bearish sentiment, the fundamental health of the Bitcoin network remains intact.

Corporate strategies are also adjusting cautiously. Companies like Bitmine continue accumulating ETH, viewing market volatility as a long-term opportunity rather than a risk. Recently, Bitmine invested an additional $49 million to acquire 17,242 ETH, bringing its total holdings to 350,000 ETH worth over $10 billion. Such contrarian investments reflect confidence in digital assets’ long-term value, even amid short-term structural challenges.

FAQ

Why are global stocks experiencing their worst decline since April?
Because of concerns over overvalued AI stocks and uncertain Fed rate cuts, MSCI down 3%, S&P 500 off 5%, and Bitcoin dropped below $86,000, indicating broad risk asset sell-off.

What risks does MicroStrategy face regarding index inclusion?
MSCI plans to exclude firms with over 50% digital assets relative to total assets, and MicroStrategy, holding 649,870 BTC, may be removed from MSCI USA and Nasdaq 100, risking $2.8B to $8.8B in passive outflows.

How does Fed policy uncertainty influence the markets?
Disagreements on December rate cuts, conflicting employment data, and the lack of clarity about future policy create volatility and risk aversion, impacting stocks and crypto.

What does increased correlation between Bitcoin and stocks imply?
That Bitcoin has become more integrated into global risk asset dynamics; during tech sell-offs, Bitcoin tends to decline simultaneously, reflecting shared investor sentiment.

What key indicators should investors watch for the market’s next move?
Watch whether the volatility index stays above 25, Bitcoin’s realized price (~$79,000), the 200-day moving average of the S&P 500, and record highs in stablecoin supply, as these could signal a potential recovery.