8 Global Risks That Could Trigger a Major Market Crash in 2025

A market crash isn't guaranteed. But as of late 2025, there are very real shock points we need to watch. Here are the eight biggest global risks that could trigger a major market crash.

1️⃣ Rapid Interest Rate Shock (Policy Mistake)

Scenario: The Fed, ECB, or Bank of Japan is forced to hike rates faster than expected due to inflation resurgence

Why is this dangerous now? Markets are currently priced for a soft landing. If rates are hiked fast and unexpectedly:

• Sudden repricing occurs
• Debt-heavy sectors (real estate, private credit) crack
• Liquidity evaporates big-time

2️⃣ AI Bubble Burst

Scenario: The rapid surge in AI-related Magnificent 7 tech stock valuations proves to be a bubble

Risk factors:

• Actual AI profits fail to meet sky-high projections
• Financing shifts from internal cash flow to debt
• Some experts warn of a potential 30% drop in a bear case scenario

3️⃣ Sovereign Debt Crisis

Japan

• Rising yen → triggers global deleveraging
• Billions in leverage trades unwind
• Liquidity shock across risk assets

Italy/Europe

• High debt + slowing growth → yield spike
• Eurozone stress similar to 2011

United States

• Surging treasury yields
• Failed bond auctions
• Political brinkmanship over debt ceiling

4️⃣ Major Geopolitical Escalation

Markets can absorb some tension. But sudden escalation is different.

Most destabilizing scenarios:

• China-Taiwan military confrontation or blockade
• Middle East supply disruption → oil shock
• Russia-NATO accidental escalation
• Trade wars/tariff escalation

Remember how Trump's sudden tariff announcements shook the market?

5️⃣ China Hard Landing

China's influence may have decreased, but they still matter.

Triggers:

• Property sector collapse
• Shadow banking defaults
• Youth unemployment and consumer weakness

Global impact:

• Commodity selloff
• Emerging market contagion
• Supply chain contraction

6️⃣ Systemic Credit Event ⚠️

This is the most underestimated risk.

Vulnerable areas:

• Commercial real estate refinancing cliff
• Private credit/leveraged loans
• Regional banks with unrealized losses
• CLOs (Collateralized Loan Obligations)

This isn't identical to 2007 subprime, but it definitely rhymes.

What to watch:

• Rising default rates
• Widening credit spreads
• Abrupt fund gating

Recent reports show rising default rates on student loans, auto loans, home payments, and credit cards. Many people simply can't pay down their debt.

7️⃣ Major Cybersecurity Attack

This is no longer hypothetical.

Targets:

• Power grids
• Water supply networks
• Financial systems

Increasingly frequent and sophisticated cyber attacks could disrupt essential services and cause severe economic damage.

8️⃣ Unexpected Black Swan Event

Think COVID-19.

• Low probability but high impact
• Unpredictable
• Would definitely cause a crash if it occurs

✨ Key Takeaways

None of these eight risks are guaranteed. But they are all current pressure points in the market, and any one of them could materialize.

In the next article, we'll dive deeper into the top three most likely triggers and analyze which sectors could get hit hardest and which might benefit.