The truth behind the early morning Bitcoin crash! Without understanding this layer of logic, you'll always be on the verge of losing money!

Early morning Bitcoin suddenly experienced a big dump, leaving many investors confused and exclaiming "the drop is inexplicable."
In fact, the underlying logic isn't complicated; it mainly revolves around capital withdrawal under liquidity tightening — a point that most people tend to overlook.
The first reason is the U.S. Treasury auction, this "bloodletting machine."
Currently, with the government shutdown, the TGA (Treasury General Account) is like a dried-up pond, and the market is already experiencing a liquidity shortage.
Although the Federal Reserve has attempted to inject funds from the banking sector to ease the situation, the funds drained by the bond market, this "black hole," far exceeded expectations.
In this round, the three-month and six-month Treasury auctions had a nominal scale of 163 billion USD, but the actual amount reached 170.69 billion USD. After deducting the reinvestment by the Federal Reserve, a total of 163 billion USD was withdrawn from the financial markets in a short period.
When liquidity is loose, this may not matter much, but during a tightening cycle, large-scale capital withdrawal can make risk assets "tremble."
Bitcoin's decline is the most direct response to capital outflows, much like how excessive blood loss can cause dizziness; when the market lacks capital support, it naturally suffers a "big blow."
The second reason comes from the "cold air" from the Federal Reserve. Powell's hawkish stance kept the market skeptical about a rate cut in December, with the probability dropping from nearly 70%.
It's important to note that expectations of rate cuts are a "booster shot" for risk assets. When these expectations weaken, the market short-term feels like being splashed with cold water, and pressure increases sharply.
It's like everyone looking forward to warmer weather for travel, only to find the cold air persists, which naturally dampens spirits.
The combination of liquidity tension and cooling sentiment acts like two mountains pressing down on risk assets, with Bitcoin being particularly affected. At this point, the market tends to become pessimistic, and a wave of selling accelerates the decline.
But there's no need to panic excessively. The way out isn't difficult: once the government resumes operations, replenishing the TGA will inject funds, like adding water to a dried-up pond, improving liquidity;
if the Federal Reserve slows down its overnight reverse repurchase operations, releasing short-term liquidity, pressure will also ease.
After all, liquidity cycles are never eternal — just like the changing seasons, after winter always comes spring.
When the market is tough, opportunities are often hidden. For investors, understanding the direction of liquidity is far more important than just watching K-line movements.