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|9 min ReadGlobal Risk Assets Stumble In Synchronized Selloff
Maya Chen
Senior Analyst
Published
Jan 16, 2026
It was supposed to be a normal Friday. Instead, it turned into one of those sessions where every screen is red and everybody is quietly comparing who lost more. United States stocks dropped, Hong Kong and mainland China followed, crypto took a beating, and even so-called safe haven gold could not hold the line. This was not one asset blowing up. It was a global risk reset, a rare moment when everything moves together and liquidity disappears.
Markets Sell Off Across The World
United States equities led the drama. The Nasdaq 100 fell nearly 5 percent from its intraday high before closing down 2.4 percent. The drawdown from its recent record peak has now widened to 7.9 percent. Nvidia, the poster child of the artificial intelligence trade, swung from a gain of more than 5 percent during the day to a loss by the close. In a single night, roughly 2 trillion dollars of market value vanished.
Across the ocean, Hong Kong and mainland China did not escape. The Hang Seng Index fell 2.3 percent. The Shanghai Composite broke below the 3900 level, with a loss of almost 2 percent. When the global tide goes out, it does not check passports.
Crypto, as usual, took it on the chin the hardest. Bitcoin slipped below 86,000 dollars. Ether dropped under 2,800 dollars. In just 24 hours, more than 245,000 traders were liquidated, with positions worth about 930 million dollars wiped out.
From a peak around 126,000 dollars in recent weeks, Bitcoin has already dropped through 90,000 at one point. It has not only given back all of its gains for the year. It now trades about 9 percent below where it started the year. That is how fast sentiment can swing when leverage is high and liquidity is thin.
Even gold, the classic hedge that many people love to call a beautiful safe asset, could not stand apart. It slid about 0.5 percent and hovered near 4,000 dollars per ounce. When the selling is truly global, almost nothing is immune.
Fed Shock, Nvidia Reversal And Burry’s AI Bubble Warning
At the center of the storm is the United States Federal Reserve. For two months, markets were happily pricing in a rate cut in December. Then the Fed’s tone turned. A series of officials started to sound more hawkish. They warned that inflation was cooling slowly, the labor market was still resilient, and that further tightening could not be ruled out if needed.
In plain language, the message to markets was simple. A December rate cut is far from guaranteed.
The speed of the sentiment shift is visible in the CME FedWatch data. The probability of a cut that sat near 93.7 percent a month ago has collapsed to 42.9 percent. What looked like a smooth ride into easier policy suddenly looks like a trap. The party atmosphere has given way to something closer to an intensive care unit.
Once the Fed punctured that warm expectation, attention locked on one name: Nvidia. The chip giant delivered a third-quarter earnings report that beat expectations. In theory, that should have ignited another leg up in big tech. Instead, the stock could not hold its gains and reversed into the red from more than 5 percent up.
When good news cannot push prices higher, that is often the worst kind of bad news. In a high-valuation tech cycle, a strong report that is sold is a sign that the trade is crowded and investors are using strength to get out.
Then Michael Burry, the famous big short who has been betting against Nvidia, poured fuel on the fire. He posted a series of comments questioning the tangled web of multibillion-dollar “circular financing” between Nvidia and its major artificial intelligence customers like OpenAI, Microsoft and Oracle.
He argued that the real end demand for AI hardware is “laughably small” and that almost all customers are effectively funded by intermediaries and distributors. For him, the AI boom looks a lot like a classic bubble, comparable in spirit to the late-stage dot-com frenzy.
Inside Wall Street, the mood is not much better. Goldman Sachs partner John Flood told clients that no single catalyst can fully explain the reversal. He said the market is heavily scarred and investors have shifted into pure profit-and-loss protection mode, obsessed with hedging downside instead of chasing upside.
Goldman’s trading team pointed to a set of structural forces behind the drop.
First, the Nvidia good news was already priced in. The company beat on the quarter, yet the stock could not keep rising. Goldman noted that when truly positive news does not get rewarded, it is usually a bad sign. The market had front-loaded the optimism.
Second, private credit concerns are rising. Fed Governor Lisa Cook warned publicly about fragile asset valuations in private credit and the complex links between that market and the broader financial system. That spooked investors and widened spreads in overnight credit markets.
Third, jobs data did not calm anyone down. The September non-farm payroll report was solid but not clear enough to guide the Fed’s next move. It nudged the odds of a rate cut higher only slightly and did not ease doubts about the interest rate path. In a nervous market, “not bad” is not enough.
Fourth, the crypto crash transmitted stress. Bitcoin’s break below the 90,000 dollar psychological level triggered wider risk selling. The timing of the crypto drop actually came before the full equity selloff, suggesting that the first cracks in risk appetite showed up in the highest-beta assets.
Fifth, commodity trading advisor funds added fuel. CTA funds were heavily long going into the week. When prices broke below key technical levels, their systematic models started to sell. That created a feedback loop that accelerated the downside.
Sixth, short sellers returned. The shift in momentum opened the door for bears. Short positions became more active and helped push prices lower. When longs are crowded and shorts smell blood, the move can snowball.
Seventh, overseas markets were weak too. Major Asian tech names such as SK Hynix and SoftBank were already under pressure. That meant there was no positive external backdrop coming from Asia to offset the weakness in the United States.
Eighth, liquidity in the order book dried up. Goldman’s data showed that top-of-book liquidity for the S&P 500 has deteriorated sharply to well below the yearly average. With so little depth, even modest sell orders can move prices a lot. This is the classic zero-liquidity problem.
Ninth, macro trading is driving the tape. Trading volumes in exchange-traded funds have climbed as a share of total market activity. That tells you that macro views and passive flows are steering the ship more than single-stock fundamentals. When the macro switch flips to “risk off,” everything tied to those baskets goes down together.
Put all of that on top of stretched valuations and aggressive positioning, and the result is what we just saw.
Is The Bull Market Really Over
To answer that question, it helps to listen to Ray Dalio, founder of Bridgewater Associates. He sees artificial intelligence-linked investments driving a clear bubble in parts of the market. But he does not think investors need to dump everything in panic.
In his framework, the current United States market looks like it is around 80 percent of the way to the classic bubble extremes that investors saw near historic peaks in the past. That means it is elevated, but not at the absolute blow-off top.
Dalio’s key point is simple. Before a bubble finally bursts, prices can still go up a lot. Selling everything just because the word “bubble” is in the air can be costly if you are early.
From our perspective, this latest selloff is not a random black swan. It is the release valve after a period of very crowded, very one-sided expectations. It also exposed some fragile foundations.
Global market liquidity is extremely thin once you look under the hood. The “tech plus AI” trade has become the crowded highway for global capital. When too many cars speed in the same lane, even a small turn of the wheel can cause a pile-up.
At the same time, more and more of the market is run by quantitative strategies, exchange-traded funds and passive money. That changes the market structure. When flows are automated and signals are similar, you get one-direction traffic. Once the brakes hit, you get a synchronized stampede.
In that sense, this was a structural selloff driven by high levels of crowded positioning and automated trading, not just a headline shock.
There is another important detail. This time, Bitcoin moved first. Crypto did not sit on the edge of the system. It was part of the main pricing chain for global risk assets.
Bitcoin and Ether are no longer fringe assets. They have become thermometers for global risk appetite, sitting right at the emotional front line. When they break, the rest of the market listens.
Putting it together, this does not look like the start of a long, grinding bear market. It looks more like the beginning of a high-volatility phase where the market needs time to recalibrate its view on growth and interest rates.
The AI investment cycle will not simply vanish. But the era of effortless gains is over. From here, markets will shift from paying for narratives to demanding real earnings. That will be true in United States stocks and in China as well.
For crypto, the pattern is familiar. It is the earliest to fall, with the most leverage and the weakest liquidity, so it crashes the hardest. But it is also often the first to bounce when risk appetite returns. In a world where everything is connected, that timing matters more than ever.
Disclaimer: This document is intended for informational and entertainment purposes only. The views expressed in this document are not, and should not be taken as, investment advice or recommendations. Recipients should do their own due diligence, taking into account their specific financial circumstances, investment objectives and risk tolerance, which are not considered here, before investing. This document is not an offer, or the solicitation of an offer, to buy or sell any of the assets mentioned.