As the cryptocurrency market opened on Wednesday, many people spilled their coffee—the price dropped over 6% within half an hour, the market was as green as festive window decorations, and the cries of 'the black swan is here' in the community were louder than alarms, with some even frantically hitting the close button.
But as an old fan, I know that I never shout panic. After analyzing the latest three pieces of data, I realized: this is no black swan; it’s clearly a 'clear-cut blood draw,' and there were signals beforehand.
First Blood: The Ministry of Finance's 'National Debt Siphon'
During those few days of the U.S. government shutdown, the Treasury's TGA account had already run dry, and last week they directly sold $163 billion in short-term treasury bonds. This is no small amount; the market needs real money to take over! Originally, the cryptocurrency and stock market trends relied on liquidity to 'nourish' them, but now billions in 'liquid money' have been siphoned off by treasury bonds, like pulling the oxygen tube from a market that is on the rise—how can it not drop sharply?
The second mouthful of blood: the Federal Reserve's 'cooling water.'
Not long ago, everyone was happily calculating the probability of a rate cut in December, but the Federal Reserve's statement 'the policy path is not yet determined' directly smashed the expectations from 70% to 45%. This left short-term funds in a panic, reducing leverage overnight, and liquidation orders poured out like dumplings. Liquidity was already tight, and this wave of liquidation directly amplified the downward trend, like burning paper in the wind, it quickly spread.
The third mouthful of blood: the 'covert tightening' between banks
Some might say, 'Isn't there still money in the market?' But if you look at the usage of the Federal Reserve's emergency liquidity tools, it's nearing the peak post-pandemic. Interbank overnight lending is also starting to tighten. Simply put, there seems to be plenty of money on the surface, but active funds are all locked up in treasury issuance and reverse repos, just like having money in your wallet but it's all in fixed deposits; you can't get it out to invest in the crypto space.
I must say this honestly: this round of plummeting is not the beginning of a bear market! Once the government shutdown ends and treasury issuance comes to a pause, the Federal Reserve sends out a milder signal, the withdrawn funds will surely flow back quickly. Panicking and selling at any cost now is as foolish as throwing away vegetables at the lowest prices in the market; holding onto cash and keeping an eye on those severely dropped leading assets is the smart move.
After all, the money in the crypto space never truly disappears; it just moves to a different place for 'business trips.' I'll be keeping an eye on every signal of capital inflow, figuring out when to get in and which assets are worth waiting for, and I'll clarify everything here for everyone. Following me is definitely a good idea; it's much better than stumbling around and falling into traps on your own—after all, in the crypto space, losing less is gaining, and following reliable analysis is much steadier than being swept away by panic.
