Why do the bloodiest big dumps in the crypto world often happen around three or four in the morning?

This is not a coincidence, but a rule.
Today, let's follow Qiang Ge to break down the "early morning liquidation steps."

① Time lag effect of liquidity: The weakest window of the system

Cryptocurrency is traded 7×24 hours, but the active hours of global traders are not consistent.

As the Asian market falls asleep, the European and American markets have yet to fully awaken—
From 2 to 5 AM Beijing time, the market trading volume will plummet, and liquidity will be at its worst.

In this period of low liquidity:
👉 A contract liquidation order worth over ten million yuan can easily break through key price levels.
👉 Trigger a chain liquidation

According to CoinGlass statistics:
In the large-scale liquidation event of 2024, 42% occurred between 2-5 AM Beijing time.
In other words, the market is the most fragile during this period.

② Funding rate settlement + liquidation linkage: system automatic replenishment

The contract funding rate is usually settled every 8 hours.
Settlement time (UTC): 0 / 8 / 16 o'clock
Corresponding to Beijing Time: 8 AM / 4 PM / 4 AM

So many times, just as you fall asleep, the system is settling the funding rate.

If the rate is positive:
✔ Bulls have to pay the bears
✔ High-leverage long positions will be liquidated by the system due to insufficient margin.

This is the second trigger for the liquidation that occurred in the early morning.

③ The "night hunt" of major players and high-frequency algorithms in Europe and America

The peak trading hours for major institutions in Europe and America are during their daytime, which is our late night.
These high-frequency programs and arbitrage machines will test market support levels during the early hours when liquidity is at its weakest.

Once a large number of leveraged positions are concentrated at a certain price level:
👉 will intentionally break through
👉 Trigger more liquidations
👉 Forming a classic night harvesting market

For example, the big dump in August last year:
At 3:15 AM, the price was instantly broken through $60,000, and $560 million was liquidated across the network within 5 minutes.

Liquidation at dawn is not fate, it's a law.**

Liquidity time difference + funding rate settlement + main algorithm trading
created an extremely fragile trading window.

The truly smart traders:
✔ Won't dream of being fully invested in the early morning.
✔ Will set stop-loss in advance and control leverage
✔ You might as well leave the screen.

In the crypto world, true experts,
Not someone who stares at the market at night,
but rather those who can sleep.

——Your crypto world running companion expert