Bitcoin and Ethereum both decline, U.S. stocks fluctuate wildly — Federal Reserve's interest rate cut prospects remain uncertain

On November 21, the cryptocurrency market came under pressure, with Bitcoin falling 5.41% in 24 hours to $86,527, and Ethereum dropping even more, down 6.37% to $2,830. Meanwhile, the three major U.S. stock indices also experienced intense volatility, ultimately closing lower across the board. Behind this decline are macroeconomic data impacts and investor concerns about the Federal Reserve’s monetary policy outlook.

Crypto Market Under Pressure, Investors’ Risk Appetite Declines

The simultaneous decline of Bitcoin and Ethereum directly reflects a weakening in global risk assets. Amid uncertain prospects for Fed rate cuts, investors are reducing risk asset allocations and shifting toward relatively safer assets. This also reminds investors to pay attention to risk issues in products like ETF delistings—during heightened market volatility, liquidity and safety of financial products often become focal points.

U.S. Stocks Rise then Fall, Nasdaq Drops Over 2%

On Thursday (November 20), U.S. stocks experienced significant swings. Benefiting from Nvidia’s strong Q3 earnings report and better-than-expected U.S. September non-farm payroll data, stocks surged temporarily, with the Nasdaq rising over 2.5%. However, concerns over overvaluation ultimately prevailed, and U.S. stocks declined across the board. The final close saw the Dow down 0.84%, the S&P 500 down 1.56%, and the Nasdaq down 2.15% to 22,078 points. The China Golden Dragon Index fell even more, down 3.26%.

In contrast, European markets performed relatively steadily, with the DAX up 0.5%, the CAC up 0.34%, and the FTSE up 0.21%.

Non-Farm Payrolls Surpass Expectations, Unemployment Rate Rises to 4-Year High

U.S. September non-farm employment increased by 119,000 jobs, far exceeding the market expectation of 50,000. However, the unemployment rate rose from 4.3% in August to 4.4%, hitting a four-year high. This data indicates that despite faster employment growth, the overall labor market still shows signs of weakness.

Economists note that currently, the economy only needs to create 30,000 to 50,000 jobs per month to meet the growth of the working-age population, well below the approximately 150,000 needed in 2024. The proliferation of AI is eroding labor demand, especially impacting entry-level positions and recent graduates, creating a phenomenon known as “jobless economic growth.”

Federal Reserve Rate Cut Probability in December Falls Below 40%

This non-farm payroll report is the last major employment reference before the Fed’s December policy meeting, but it is unlikely to change internal divisions within the FED. Market bets on a rate cut in December have fallen from higher levels to below 40%. The 10-year U.S. Treasury yield dropped 5 basis points to around 4.08%, reigniting recession concerns.

FED Governor Lisa Cook explicitly stated that stock, corporate bond, real estate, and leveraged loan markets are all at historic highs, potentially signaling significant valuation corrections.

Increasing Divisions Within the Federal Reserve

Recently, senior Fed officials have made contradictory statements regarding rate cut prospects. Chicago Fed President Goolsbee said that despite the strong U.S. economic fundamentals, he is uneasy about too rapid rate cuts, believing inflation data will remain difficult to significantly decline in the coming months.

Cleveland Fed President Harker warned that if the Fed lowers rates to support the labor market, it could prolong high inflation and increase financial stability risks. She emphasized that the Fed needs to balance its dual responsibilities of price stability and full employment.

Hedge Funds May Face Chain Reaction of Sell-offs

Goldman Sachs indicated to clients that after the S&P 500 broke below the key level of 6,725 points, trend-following hedge funds might sell nearly $40 billion worth of stocks in the coming week. These funds view this level as a signal to sell or increase short positions. If stocks continue to decline, systemic hedge funds could sell up to approximately $65 billion worth of stocks.

Goldman’s data shows that these hedge funds had accumulated about $150 billion worth of global stocks before the decline. The last time stocks fell below these key levels was in October.

Market Overview

Crypto: Bitcoin at $86,527 (down 5.41% in 24 hours), Ethereum at $2,830 (down 6.37%)

Commodities: Gold slightly down 0.02% to $4,076 per ounce; WTI crude oil down 1.09% to $58.7 per barrel

Forex: US Dollar Index up 0.1% to 100.2; USD/JPY up 0.19%; EUR/USD down 0.09%

Hong Kong Stock Index Futures: Hang Seng night futures close at 25,460 points, down 376 points from yesterday’s close; China Enterprises Index night futures at 9,012 points

Company News

Gap Q3 same-store sales grew 5%, the strongest performance since the 2017 holiday season, surpassing Wall Street’s expected 3.1%. The company benefited from a collaboration with girl group “Katseye,” and its stock rose over 4% after hours. Full-year operating profit margin is expected to be about 7.2%, higher than previous estimates.

Google launched Nano Banana Pro image editing tool, based on the Gemini 3 Pro AI model, capable of combining search-generated info-graphics and merging up to 14 images. The tool will be available free through the global Gemini app, with higher usage quotas for subscribers.

SoftBank plans to invest up to $3 billion to transform an electric vehicle factory in Ohio for producing OpenAI data center equipment. SoftBank is one of OpenAI’s largest investors.

Market Outlook

The current market is at a crossroads of multiple uncertainties—uncertain Fed policy prospects, complex inflation trends, and rising corporate valuation risks. This not only affects stock market volatility but also directly impacts the performance of risk assets like Crypto. Investors should closely monitor the Fed’s December policy meeting and remain alert to potential chain reactions from hedge fund sell-offs.