Author: Babywhale, Techub News
One week ago, due to the expectation that the future demand for the artificial intelligence chip industry chain may decrease due to DeepSeek, stocks including Nvidia and AMD in the US stock market started to decline from the overnight session, and Bitcoin, which has been following the trend of the US stock market in recent times, was also dragged down. During the early Asian session today, the overnight US session, perhaps due to the impact of the US government's announcement on Saturday to impose a 25% tariff on imports from Mexico and Canada and a 10% tariff on imports from China, Bitcoin continued to decline after a slight drop over the weekend, falling to around $91,000 around 10am Hong Kong time.
In fact, the decline in Bitcoin this morning was not particularly large, but most tokens including Ethereum experienced a cliff-like decline, with Ethereum falling by about 40% over the past three days, reaching a low of around $2,100 this morning, and a large number of Altcoins hitting new lows since the 2022 bear market.
The futures market was also a bloodbath. According to Coinglass data, calculated at the lowest point of the day, the amount of crypto contract liquidations exceeded $2 billion in the past 24 hours, with over 700,000 people liquidated. This figure is even higher than the panic-induced liquidations in the market after the unexpected rate hike by the Bank of Japan last year, setting a new record for the highest 24-hour liquidation amount in nearly two years.
The total market capitalization of cryptocurrencies excluding the top ten, as tracked by TradingView, fell to around $220 billion at its lowest point this morning, reaching the level seen from August to October last year.
"Last drop" or "start of a bear market"?
In last week's analysis article, the author pointed out that after Bitcoin failed to break through the $106,000 to $107,000 range multiple times, we have reason to guard against the risk of a short-term correction. Bitcoin fell to around $98,000 last Monday and then rebounded quickly, reaching around $106,000 again, leading many investors to start expecting the "Spring Festival red envelope rally" that has proven true for consecutive years.
But just like last year when Bitcoin rebounded to around $70,000 in late July and early August and then quickly fell back, if multiple attempts to break through a certain high point fail, it is very likely to lead to a rapid decline.
In the middle of last week, the Federal Reserve announced that it would hold interest rates steady and continue to maintain rates, and removed the statement about making progress in reducing inflation from its statement, leading the market to expect that the Federal Reserve may not cut rates in the first half of the year. This news caused the risk asset market to rise instead of falling.
This to some extent also provided a good explanation for the decline last Monday: Many investors were puzzled by the plunge triggered by the DeepSeek incident, believing that the emergence of DeepSeek could actually help many companies use less computing power to train models, thereby promoting the development and application of AI, which is ultimately beneficial rather than harmful to Nvidia's chip design business. But the capital market is often not afraid of definite bad news, but more afraid of uncertain news. This is also one of the reasons why Bitcoin was able to quickly recover its losses. The brief decline was due to uncertainty, and the subsequent rebound was more like "even if it's bad news, it's predictable".
But what the author wants to remind this time is that the uncertainty about the Federal Reserve's future policy path and the impact of Trump's aggressive strategy on the global economy has entered an extremely uncertain state. The Trump team originally announced that Trump would not initiate the process of raising tariffs in the early days of his term, but the fact is that this strategy has been implemented earlier than expected, and the impact of the tariff increase on the US economy is still unknown, making the Federal Reserve's next move unpredictable.
Two events that could determine the direction of the capital market have become unpredictable, making the market extremely fragile, and any slight breeze could trigger market volatility beyond expectations. Although the author still believes that it is too early to definitively judge whether it is a bull or bear market, risk factors have been accumulating rapidly in the short term. Even if a large number of policies supporting the development of Web3 are proposed in the near future, even if multiple US states support government investment in Bitcoin in a short period of time, they may still be unable to offset the impact of macroeconomic uncertainty.
Whether it is the gap-down opening of the S&P 500 index futures in Hong Kong time this morning, the gap-up opening of the US dollar index, or the recent new highs in gold prices, they all indicate that a large amount of capital is choosing to hedge. The other side of Crypto's ability to generate excess returns is the huge losses that many people cannot bear. The author suggests that in a market environment with high uncertainty, the best strategy is to watch more and do less.
