The truth behind the decline of the crypto market: liquidity exhaustion or the start of a bear market

Recently, many people are blaming this round of Bitcoin decline on various “black swan events”—such as law enforcement agencies uncovering large digital asset holdings, the demise of the market decentralization myth, and so on. To be honest, these arguments sound convincing, but in reality, they have little to do with the market logic.

History Speaks: Uncoveries Have Nothing to Do with Price

Think about it—early on, the US, Germany, the UK, and other countries seized large amounts of Bitcoin. What was the result? Bitcoin continued to rise as it should, and market cycles kept operating normally. Even individual incidents are essentially “insider operations” that have no necessary connection to the fundamentals of the entire industry. These are not decisive factors.

The True Killer: USD Liquidity Drains

The real reason for the market decline is quite simple—nobody is buying anymore. Just look at the order book—buy orders are as thin as paper, which is a classic sign of liquidity exhaustion. All the USD in the market is shrinking; institutions are starting to tighten cash flow. Whatever they sell is just to stop the bleeding.

Recent corporate financing news is a warning sign: giants like Amazon and Meta are issuing bonds to support AI businesses—which hasn’t been seen in the past three years. What does this indicate? Their own cash flows can’t even cover AI expenses. Meta, in particular, is being questioned by capital markets, and its stock price is about to give up its full-year gains. Companies of this level need to replenish their blood supply; how can the market not be nervous?

Emotional Impact: That Big Downward Candle Changed Everything

The large downward candle on October 11 directly shattered the crypto market sentiment, and it hasn’t recovered since. Coupled with the Fed’s reduced rate cut expectations and the four-year Bitcoin cycle, market sentiment has further deteriorated.

Technical Reality: ETF Large Sell Orders

The main selling pressure comes from Bitcoin ETFs, especially the reduction in holdings by iBIT. This is not some conspiracy theory but real market data.

Correct Understanding of Bitcoin’s Nature

By the way, a common misconception needs correction: Bitcoin is not a safe-haven asset, but a reserve asset. Safe-haven assets are those that funds rush into during market panic; Bitcoin’s essence is as a hedge against inflation. Bitcoin’s price movements depend on one thing—USD liquidity. When USD is abundant, Bitcoin rises; when USD tightens, it falls. In simple terms, Bitcoin is a water reservoir for USD.

As long as market funds are plentiful and buy orders are solid, even if someone places a huge buy order of 10,000 BTC at $100K, who dares to dump? The shorts would have to eat all those 10,000 BTC to continue downward—realistic?

Current Market Situation

According to the latest data, BTC is currently priced at $88.47K, with a 24-hour change of +0.87%; ETH is at $2.96K, with a 24-hour change of +0.65%. In terms of trading volume, BTC’s 24h volume is $866.95M, and ETH’s is $410.09M.

Bottom Line: Don’t Trust Conspiracy Theories When Looking at Data

The crypto market’s decline is not because of “mythical breakdown,” but the result of USD liquidity drying up + ETF large sell-offs. Those who understand the market can see at a glance from the order book; only those unfamiliar will follow various conspiracy theories and make noise. Stay calm, wait for the market correction to complete, and the subsequent trend will speak for itself.