The moment I opened the K-line chart in the morning, I guess many friends, like me, took a sharp breath as mainstream cryptocurrencies collectively plunged. Even the usually resilient top assets broke through key support levels, and the green on the holding page was more eye-catching than the grass in spring.
The back end was in chaos, filled with messages asking, 'Is the black swan back?' and 'Should we quickly cut losses?' But to be honest, this drop is not an unexpected event; it is the simultaneous force of three hidden 'funding undercurrents' that twisted market liquidity into a 'twisted doughnut.' As a veteran who has been watching the crypto market for eight years, I will dissect the logic behind this today, helping everyone turn anxiety into opportunity.
First undercurrent: The 'siphoning effect' of the government bond market
Recently, the biggest 'suction pump' in the global capital market is undoubtedly the issuance of government bonds. With over 100 billion USD of government bonds being sold intensively in a single week, this is not just a simple financing operation, but a significant increase in the benchmark for 'risk-free returns.' Capital is always profit-seeking, and as the yields on stable government bonds continue to rise, the hot money that was originally 'lying flat' in the crypto market will naturally turn to this 'guaranteed profit' field.
It's like having some money in hand, with one side being crypto assets that could skyrocket but also plummet, and the other being government bonds that guarantee principal while offering decent interest. Many short-term funds will certainly choose the latter. The crypto market lacks this part of 'live water,' and once selling pressure comes in, it easily leads to 'volume-less declines,' causing many friends' holdings to be 'passively collapsed.'
Second undercurrent: The Federal Reserve's 'expectation adjustment'
The market has been immersed in the dream that 'the interest rate cut cycle is about to begin,' and many people leveraged their positions to bet on the market. However, last week's statement from the Federal Reserve poured cold water on the market—'Current inflation levels still need observation; there is no rush to cut rates.' This statement seems mild, but in reality, it issued an 'eviction order' to leveraged funds.
What high-leverage players fear most is the reversal of expectations. Once they feel that interest rate cuts are hopeless, closing positions and cutting losses become instinctive reactions. A large number of liquidation orders come crashing into the market like a snowball, forming a 'stampede exit.' This is also why many coins fall without resistance; it's not that the assets themselves have issues, but rather a chain reaction caused by a short-term break in the funding chain.
Third undercurrent: 'Temporary tension' in short-term liquidity
Another easily overlooked point is the short-term liquidity fluctuations in the interbank market. Recently, the overnight borrowing rate suddenly spiked, indicating that some financial institutions are experiencing 'temporary cash shortages.' When banks themselves are busy finding money to rotate, there is naturally no excess funds flowing into the crypto market through various channels.
The market is like a pool of water; with no new water coming in and old water flowing out, the water level naturally declines. However, this liquidity tension is often temporary; once interbank funding eases, this pressure will quickly dissipate.
The three most important things to do right now:
Don't panic sell: Many coins have already fallen to the lower edge of the previous fluctuation range. Selling at the bottom is more terrifying than missing out; missing out might just mean no profit, but panic selling is a real loss of capital.
Hold cash tightly: Adjust your position to a risk level you can accept, leaving enough 'bullets' to act once stabilization signals appear.
Stay alert for signals: Focus on three indicators—whether government bond yields fall, whether Federal Reserve officials release easing signals, and whether interbank borrowing rates return to normal. As long as two of these three signals improve, the market is likely to stabilize.
As for the bottom-fishing targets, my suggestion is to focus on the top 10 mainstream assets by market capitalization. These targets have been tested by the market for a long time, and their resilience and rebound ability are far stronger than that of small coins. Once signals are clear, do not go all in at once; enter in 3-5 batches to control risk while not missing out on the rebound.
In fact, the crypto market has always been about 'fear creates opportunities, greed destroys wealth.' The more panic there is in the market, the more one must remain calm. Those who panic-sell in a crash not only lose their chips but also sacrifice their entry tickets for the next round of market movements.
