Friends who just entered the circle must be feeling restless lately: positions are glowing green, the K-line is heading downwards, and U.S. stocks are also weakening in sync. Is the crypto market about to repeat the 'black swan'? As an analyst who has been deeply involved in the industry for 8 years, let me directly point out the key issue: this wave of decline is not due to problems with the project's fundamentals, but rather a liquidity crisis triggered by the U.S. government's 'shutdown'. The rush to cut losses is the real pitfall!
Many people only see the market decline but do not understand the underlying funding logic: The two parties in the U.S. are deadlocked, and the government has been shut down for 37 days, tying the historical record. In the absence of funds, the Treasury can only 'siphon' from the market to save itself, having drawn nearly $700 billion over the past two months. It's like a large portion of the market's funding pool has suddenly been drained, with banks' available funds sharply reduced, leading to a direct depletion of liquidity in the entire market — the Federal Reserve's bank reserves have fallen to the lowest level since 2021, indicating a severe tightening of funds.
Liquidity is gone, and the chain reaction follows: The cost of borrowing rises sharply, with overnight financing rates skyrocketing by 22 basis points, directly exceeding the benchmark rate maintained by the Federal Reserve. It's important to note that the previous interest rate cuts by the Federal Reserve were meant to alleviate market pressure, but the Treasury's 'withdrawal' directly offset the impact of the rate cuts, returning the market to a state of tight funding. During such times, capital becomes extremely sensitive, and even a slight disturbance can trigger risk-off selling. This is also why the U.S. stock market and the crypto market have synchronized corrections—it's not that the assets themselves are bad, but rather that the funds are temporarily 'out of rice to cook'.
Three practical tips for beginners: Don't make fatal mistakes at the bottom.
Don't blindly bottom fish, and don't rush to cut losses: The core contradiction in the current market is the lack of liquidity, not a change in industry logic. Bottom fishing now is akin to wading through a muddy pit of tight funding, and you might end up buying at 'halfway up the mountain'; panic selling will cause you to miss the subsequent rebound after liquidity recovery, turning unrealized losses into realized losses.
Stabilize your position and maintain cash reserves: It is recommended to keep your current position at 50%-60%, leaving enough cash to wait for the turning point. Liquidity crises often come quickly and go just as fast; once the government reopens, funds will flow back into the market rapidly, making it more prudent to choose your timing for layout.
Stay away from high-leverage trading: During tight funding periods, market volatility can be magnified, and high leverage can easily lead to forced liquidation due to short-term fluctuations, leaving no opportunity to participate even if the market rebounds later.
Why is it said that the government's reopening is a turning point in the market?
Once the two parties in the U.S. reach a consensus and the government resumes operations, the Treasury's 'withdrawal' actions will immediately stop and may even release new funds to supplement the market. At that time, the exhausted liquidity will quickly flow back, and previously squeezed funds will seek out quality assets again, with cryptocurrencies often becoming the preferred choice for fund inflows.
As an analyst who monitors the market for 12 hours a day and tracks global macro policies, I will be the first to synchronize updates on U.S. government negotiations, changes in liquidity data, and subsequent high-quality sectors worth laying out. If you're feeling confused now and want to get first-hand news and precise operational advice, following me is the right choice. Market turning points often only favor those who are prepared; following the professional rhythm is the way to make long-term profits in the crypto market.
