Yesterday, 153,000 people in the crypto circle were liquidated, with 532 million dollars evaporating.
BTC dropped from 94k to 89k, and many long positions were wiped out.
Today BTC rebounded back to 93k, and the comments section is full of 'Can we bottom out now?'.
I reviewed yesterday's liquidation data and found that retail investors didn't die due to bad luck,
Instead, they made the same cognitive error.
but because of the same mistake, which is still happening today.
The Federal Reserve's 25BP rate cut was expected news.
But Powell's statement at the press conference changed everything: interest rate cuts may not continue in the future.
The market changed in an instant.
Coinglass's data is brutal:
Total liquidation: 532 million dollars.
Number of people liquidated: 153,000.
BTC liquidation: 170 million dollars, mostly long positions.
Long position ratio: over 75%.
What does this mean?
Retail investors opened a large number of leveraged long positions near 92k, betting that BTC would continue to rise.
They think: interest rate cut = good news, good news = must rise.
The market tells them with fluctuations: you are thinking too simply.
I also experienced similar liquidations in 2021.
At that time, BTC pulled back from 64k to 48k, I opened a long position with 5 times leverage at 52k.
As a result, BTC continued to fall to 42k, and my position was liquidated at 46k.
After that time, I understood a principle: what kills during a consolidation period is not the wrong direction, but psychological illusions.
Illusion 1: Support level = safe zone.
Yesterday, many people opened long positions at 90k, reasoning that 'the technical analysis shows this is a strong support'.
But support levels during a consolidation period are not solid bottoms, but rather bait.
Market makers know that retail investors focus on key levels, so they specifically break through them, triggering stop losses and liquidations, then pull back.
Data confirms this:
After BTC fell below 90k, it quickly rebounded to 92k.
But 153,000 people have already exited.
Illusion 2: Leverage can accelerate profits.
The logic that retail investors love: when the market is unclear, use leverage to 'take a gamble'.
Opening a 10 times long position at 92k, liquidated when it fell to 90k.
Opening a 10 times long position at 90k, liquidated when it fell to 88k.
The fluctuation during the consolidation period is 3000-5000 dollars, and any leverage can't withstand the back-and-forth sweep.
What do real experts do during a consolidation period?
They lowered the leverage to 1-2 times, or even cleared positions to observe.
Because they know: you can't make big money during a consolidation period, but you can preserve your capital.
Illusion 3: Good news = immediate rise.
The biggest trap yesterday was 'interest rate cut benefits'.
Retail investors see an interest rate cut, and their first reaction is to go long.
But they overlooked two things:
First, the market has already digested the expectations of an interest rate cut in advance.
In the price of 92k, the interest rate cut has already been priced in.
Secondly, Powell's speech hinted that there will not be continued easing in the future.
Liquidity expectations have been weakened.
So on the day of the interest rate cut, BTC fell instead of rising.
It's not that the market is crazy, it's that your understanding of 'good news' is too shallow.
The survival rules of 'three don't touch' during a consolidation period.
After experiencing several liquidations, I summarized the survival rules during the consolidation period.
The core is three words: don't gamble.
1) Don't touch high leverage.
Using leverage during a consolidation period = giving away money.
Even if you are sure the direction is right, don't open more than 3 times leverage.
Because the market during a consolidation period doesn't talk about direction, only about volatility.
A 3000 dollar fluctuation, and a 10 times leverage can't withstand a 300 dollar pullback.
You might have the right direction, but before the market starts moving, you've already been kicked out.
2) Don't touch false support levels.
Technical analysis fails during a consolidation period.
Support levels are not your shield for protection, but rather traps set by the market makers.
Yesterday's 90k, 88k, on the surface are key levels, but in reality are 'liquidation harvesting lines'.
If you really want to bottom fish, at least wait until:
Breaking all key levels.
The fear index dropped below 20.
The total liquidation across the network exceeded 800 million dollars.
That's when you are closer to the 'true bottom'.
3) Don't chase after rising and falling prices.
The most taboo thing during a consolidation period is frequent trading.
At 92k, feeling it will rise, chasing longs.
At 89k, feeling it will drop, chasing shorts.
As a result, getting slapped in the face back and forth, with transaction fees and liquidations, losing to the point of questioning life.
The only correct posture during a consolidation period is: reduce positions + wait.
Reduce positions to below 30%.
Spend the remaining time watching the market and reviewing, waiting for the real directional signal to appear.
Finally, let me say one thing.
Yesterday, 153,000 people were liquidated.
Today BTC is back to 92k.
I see many people in the comments asking: 'Can I bottom fish now?'.
My answer is: not yet. The consolidation period is not over.
The rules of the cryptocurrency world have never changed: those who are killed during a consolidation period are always the ones who can't wait.
The ones who truly make money are those who control their positions during a consolidation period, wait for signals, and preserve their capital.
Remember: surviving is more important than anything else.
