The screen of cryptocurrency is so green that it makes people panic, while I leisurely brewed a cup of coffee, knowing that the long-awaited opportunity to increase my position has finally arrived.
The cryptocurrency market in the early hours of Wednesday can only be described as 'bloody.' Bitcoin plunged 6% in half an hour, followed closely by Ethereum, which fell 4%. The entire market collapsed like a toppled domino.
The community is in an uproar: 'The black swan has arrived!' 'The bull market is over!' New investors are frantically clicking the sell button.
And I just quietly opened my wallet and began to increase my position in batches. This is not a black swan, but a 'massive capital withdrawal' that has long been evident, while most people remain oblivious.
01 A terrifying night in the market, the culprit behind the crash emerges.
The sudden plunge in the early morning caught everyone off guard. Bitcoin fell below $88,000 during the day, and within just 24 hours, the total liquidation amount across the cryptocurrency contracts reached $270 million, with 115,700 people becoming victims of this catastrophe.
Among the most brutal cases, there was a large liquidation on an Ethereum contract, with a single liquidation amounting to $4.85 million, equivalent to over 34 million RMB evaporating in an instant.
This massacre did not happen without warning. Three key signals had already appeared in the market; it was just that most people were blinded by the fluctuations in front of them.
The Fed's 'sudden shift' is the primary driver. Although the Fed lowered rates as expected last week, Powell's subsequent comments instantly cooled the market—he was noncommittal about whether to continue rate cuts in January, emphasizing that policy will 'depend on economic data.'
Market expectations reversed: the probability of the Fed cutting rates in January next year plummeted to 24.4%, while the probability of maintaining the current rate soared to 75.6%. The expectation of liquidity easing weakened, and the support for risk assets collapsed.
02 Three truths uncover the essence of capital withdrawal.
First, a 'capital black hole' in the treasury market is forming. The U.S. Treasury issued $163 billion in short-term bonds last week, and this huge reservoir of funds instantly drained liquidity worth hundreds of billions from the market.
It's like a sudden downpour, and market liquidity is like a sponge soaked with water—seemingly abundant, but with just a gentle squeeze, it can dry up instantly.
Second, a collective shift among institutional players. Standard Chartered has just significantly lowered its Bitcoin price forecast, cutting the year-end target from $200,000 to $100,000, and the target for next year from $300,000 to $150,000.
Jeff Kendrick, the head of global digital asset research, pointed out the key: the buying from Bitcoin whales has 'come to an end,' and there is insufficient new buying power. This means that the main driving force behind the previous rise is fading.
Third, the chain reaction of leveraged trading explosions. Data shows that over 85% of liquidations came from long investors. In the cryptocurrency market, high leverage has become an invisible killer.
Under 5x leverage, a 20% reverse movement in the market could lead to liquidation; under 10x leverage, only a 10% change is needed; and at 50x leverage, just a 2% fluctuation is enough to wipe out an account. When the market starts to fall, leverage acts like a row of falling dominoes, triggering a chain reaction.
03 The art of survival in a crash: two strategies to navigate the crisis.
In the face of extreme market volatility, the difference between newcomers and seasoned players is: one reacts emotionally, while the other responds systematically.
Do not panic sell. A key characteristic of the waterfall in the crypto market is 'rapid and steep declines,' but they often last for a limited time. The current market is not the beginning of a bear market; rather, it is a temporary withdrawal of funds. Once the government shutdown ends and the Fed sends a mild signal, the withdrawn funds will flow back.
Historical data shows that the cryptocurrency market has experienced multiple cycles of sharp declines and surges, but the long-term trend remains upward.
Opportunities arise from downturns. If you have idle funds, you can gradually accumulate core assets like BTC and ETH in small positions. Remember one principle: the more it drops, the smaller the buying increment; never go all in at once.
For newcomers, I strongly recommend using the '532 Capital Allocation Rule': 50% to mainstream coins like BTC and ETH, 30% to potential coins ranked 11-50 by market capitalization, and 20% as flexible funds. This diversified allocation can effectively guard against the volatility risk of a single coin.
The market never lacks opportunities, only patience. While a newcomer who has just experienced their first crash may feel panic when seeing the red numbers on the screen, seasoned players have already opened their charts, looking for quality assets that have been mistakenly sold off.
It is always darkest before dawn. When the last batch of hesitant investors also chooses to sell, the bottom of the market is often born. Not only did I not reduce my positions, but I quietly set several buy limit orders. After the storm, those who survive will witness the opportunities of the next cycle.
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Here, we do not talk nonsense; we only discuss logic and data.#巨鲸动向 $ETH
