Looking at the K-line chart in a sea of green, many are starting to get excited again. However, as a veteran player who survived the bloodbath since 2017, I must be honest today: this round of sharp decline is not the end-of-the-world scenario; rather, it’s the market squeezing out excess liquidity and clearing leverage. Bitcoin dropping from $126,000 to $83,000 may look frightening, but the real disruptors are two forces— the US Treasury is draining liquidity, and the Federal Reserve’s easing measures are in full swing.

**Liquidity is the real culprit**

Recently, the US Treasury has been cutting expenses while aggressively issuing government bonds to finance itself, effectively siphoning around $200 billion in liquidity from the market. This is like inserting a giant straw into the trading pool, and high-volatility assets like Bitcoin are naturally the first to be affected. What’s more painful is that Bitcoin spot ETFs have experienced continuous net outflows, with over $1 billion leaving in just one week, making buying support extremely fragile.

**The rate cut dream is shattered**

The market was still hoping the Federal Reserve would cut rates and ease in December, but officials directly poured cold water by saying it’s not under consideration for now. Once dollar liquidity tightens, those with high leverage will immediately be exposed—10x leverage can be wiped out with just a 10% drop, leading to a chain reaction: liquidation → forced sell-offs → further declines → more liquidations. In the past 24 hours alone, total leverage liquidations across the network reached $941 million, with 260,000 traders forced to close positions.

**Regulatory pressure and emotional collapse**

The central bank reiterated the red line for virtual currency regulation, and the EU’s MiCA legislation has cracked down hard on stablecoins. Various speculative coins have collapsed one after another, and market confidence has been thoroughly shattered. To be blunt, this decline is like bursting a bubble—seemingly sudden, but with signs long in the making.