A thrilling flash crash occurred during today’s midday session, with panic spreading throughout the market. Bitcoin’s intraday price plunged as low as 79,937, marking a significant pullback from previous highs. Ethereum was not spared either, sinking to a low of 2,639 and losing its key support level. Even more concerning, the altcoin sector experienced a collective decline, becoming the “hardest hit area” in this correction—SOL fell by 12% in a single day, reaching a recent low; LTC dropped all the way to the 80 level, hitting a new short-term low; other small and mid-cap coins posted varying losses, with most falling over 10%, leaving the market in disarray. The main reason stems from the fact that, while most market participants were eagerly awaiting the December Fed rate cut window, a sudden “hawkish storm” completely disrupted market rhythm. Several key Fed officials collectively sent strong signals, and the seemingly imminent rate cut door is rapidly closing, with the liquidity-sensitive crypto market bearing the brunt.

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What appeared to be a sudden flash crash was actually the inevitable result of multiple uncertainties converging, with the Fed’s policy shift acting as the “final straw” that broke the market. First, the reversal of Fed policy expectations is the core trigger for this correction. Previously, based on easing inflation data, the market widely bet the Fed would start a rate-cutting cycle in December, and a wave of liquidity flooded into crypto assets, pushing prices higher. However, as several Fed officials turned hawkish, clearly stating that current inflation is still above long-term targets and that premature rate cuts could risk an inflation rebound, the market’s rate-cut hopes were dashed, prompting an accelerated exodus from the high-risk crypto market. Additionally, ongoing international turmoil has cast a shadow over the market. Repeated geopolitical conflicts and escalating trade tensions between major economies have led to a sustained decline in global risk appetite, with capital flowing toward safe-haven assets like gold and US Treasuries, leaving high-risk crypto assets out in the cold. At the same time, the US government’s previous 43-day shutdown and its lingering “aftereffects” continue to weigh on the market. During the shutdown, the release of economic data was hindered and government services were limited, leaving the market uncertain about US economic fundamentals; after the shutdown ended, risks related to fiscal spending adjustments and the debt ceiling emerged, further dampening sentiment.

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The current downtrend in the crypto market shows strong persistence. Previously, a one-sided rally formed on rate-cut expectations, building up significant profit-taking positions. As these bullish expectations faded, concentrated profit-taking triggered a chain reaction. Although there was a brief rebound in the afternoon, the rally was weak and failed to attract new inflows, instead providing another opportunity for bears to exert pressure, further building bearish momentum. Trading volume increased significantly during the decline, indicating strong selling pressure and confirming the dominance of bears in the short term. In this environment, investors should remain rational and avoid blindly bottom-fishing or panic selling. From a trading strategy perspective, it’s advisable to continue following the “sell the rebound” approach in the evening, using previous key support-turned-resistance levels to place short positions, while strictly setting stop-losses to guard against an oversold rebound. For medium- and long-term investors, this correction also offers a chance to screen for quality assets, focusing on crypto projects with high technical barriers, clear use cases, and strong teams, and waiting until market sentiment stabilizes and downside risk is fully released before gradually building positions.