Family, who understands this! At 2 a.m., the crypto world staged a 'terrifying roller coaster' — Bitcoin, which was originally stable around 42800, suddenly dropped like a kite with a broken string, crashing 2800 points in just 15 minutes, and forcefully breaking the critical 40000 mark! Social media is filled with cries of liquidation and screenshots of losses, even veteran players are shouting 'I can't take it anymore', and the panic index has skyrocketed.
But as an old analyst who has been watching the market for 8 years, I have to say this: this sharp decline is not a 'doomsday signal' for a trend reversal, but rather a 'short-term pain' in the battle of capital. Understanding the logic behind it will prevent you from being swayed by emotions.
The 'culprit' that needs to be identified first is the liquidity withdrawal triggered by the U.S. Treasury auction. Yesterday, the U.S. Treasury issued 163 billion U.S. dollars in 10-year Treasury bonds, while the current balance of the Treasury's TGA account is only 57 billion U.S. dollars. Institutions are madly pulling back funds to grab bonds, which directly leads to a 'liquidity emergency' in the market. Reflecting on the crypto market, the liquidity of Bitcoin on the Coinbase platform plummeted by 42% within an hour — simply put, 'buying cannot keep up with selling', and a decline has naturally become inevitable.
What makes it worse is the hawkish statements from the Federal Reserve. Early in the morning, Federal Reserve official Goolsbee directly stated: 'It is still too early to discuss interest rate cuts; inflation has not returned to target.' This statement directly dampened the market's expectations for interest rate cuts, plunging from 60% to 18%. It is important to know that the crypto market is extremely sensitive to liquidity; once the expectations for interest rate cuts cool down, the opportunity cost of holding coins will rise, and some funds will withdraw to observe. Just the GBTC saw 320 million U.S. dollars flowing out in one day, further amplifying the decline.
However, everyone doesn't need to panic; historical data gives us confidence: after the past 5 times when Bitcoin's daily decline exceeded 15%, the average rebound in 30 days reached 22%. The market has always been 'bottoming out in panic and topping out in optimism'; the key now is not to blindly bottom-fish, but to wait for clear signals.
Give everyone the key points, bottom-fishing must wait for two core signals: first, the U.S. Treasury yield falls below 4.5% (indicating that liquidity begins to loosen), and second, Bitcoin stabilizes at 41500 (indicating that the downward momentum has exhausted, and buying pressure starts to return). It is important to remember in terms of position that 'surviving is more important than making quick money': do not let contract leverage exceed 3 times, leave half of the cash in spot positions, and do not fire all the bullets at once.
In fact, the survival rule in the crypto circle is very simple: when others panic, I remain calm; when others follow the trend, I observe; understanding the flow of funds, this 'faucet', allows me to avoid most pitfalls. This sharp decline is essentially the market 'changing blood', washing away those short-term funds that chase highs and kill lows, and instead clearing obstacles for subsequent rises.
I will continue to closely monitor the key levels of U.S. Treasury yields and Bitcoin, and I will synchronize any signals to everyone as soon as possible. If you find this analysis useful, don't forget to like and follow, after all, in this uncertain market, following reliable people to watch the market is much better than operating blindly on your own. Have you already cut losses or are you on the sidelines? Let's chat about your operations in the comments and see who is the true 'calm party'!
