Why did the US stocks plummet? The underlying logic behind gold and Bitcoin being buried together

Recently, the market has experienced a rare “three kills” situation—US stocks, gold, and cryptocurrencies all weakening simultaneously. In mid-November, the Dow Jones Industrial Average fell over 1%, gold approached the $4,000 level, and Bitcoin and Ethereum both declined by more than 2%. As of the time of writing, this downward trend has not yet stopped.

Why Did US Stocks Drop Significantly? Two Key Factors

Reversal of Rate Cut Expectations

Recent statements from Federal Reserve officials have turned hawkish, leading to a sharp decline in market expectations for a rate cut in December to 43%. The previous hopes that rate cuts would support various assets have been shattered, prompting investors to reassess asset valuations.

Fading AI Boom

The market is questioning whether long-term capital expenditure in tech stocks can generate corresponding returns. Events like Amazon’s bond issuance cooling reflect increased investor vigilance toward business models supported by massive financing. This directly impacts the high-valuation sectors of US stocks led by tech stocks.

Technical Indicators Have Already Sounded Alarm Bells

The S&P 500, Dow Jones, and NASDAQ indices have all fallen below their 50-day moving averages, indicating a shift toward weakness. More notably, Bitcoin’s technical chart shows a “death cross”—the 50-day moving average crossing below the 200-day moving average, which typically signals a deeper correction.

Bitcoin’s price has fallen from $91,107 in November to a new low of $86.88K, a nearly 7-month low, plunging the entire crypto market into a correction mode.

Will It Drop Further in the Future?

Several analysts have issued cautious forecasts. Technical analysis firms predict that the NASDAQ could fall by as much as 8%. The COO of crypto trading platform BTSE believes that as AI valuations lose support and rate cut prospects become uncertain, Bitcoin may struggle to stop falling. If the stock market continues to decline, Bitcoin could even test the $70,000 support level again.

Gold faces unique pressure. Loss-making investors may be forced to liquidate gold holdings to cover losses, leading to a short-term decline in gold along with other risk assets, turning it into a “sacrificed safe-haven asset.”

How Should Investors Respond?

Top industry investment advisors warn that many assets are currently highly overvalued. The strategy is to allocate about 20% of your portfolio to cash reserves to prepare for potential significant market adjustments.

This is not panic, but a reminder to respect risks when all three major assets are signaling warning signs.