The core reason for the significant decline in the stock and cryptocurrency markets in 2021 was the rapid tightening of liquidity. More specifically, in December 2021, the U.S. debt ceiling was raised again, and the TGA was subsequently expanded quickly, extracting liquidity from the market.

At the same time, reverse repos began to increase from February 2021, while the Fed's total assets did not peak and start to decline until May 2022.

Therefore, the decisive factor at that time was the TGA.

However, even so, why did the market peak and turn bearish a month before the liquidity shift (in November 2021)?

This requires attention to the news in November, when several factors came together: one was the discovery of a new variant in South Africa, and then JP Morgan indicated that it would begin to reduce QE (which is often a precursor to stopping QE).

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