Yesterday early morning, Bitcoin suddenly plunged, leaving many people stunned — why did it drop again? And so quickly. In fact, if you look beyond the surface phenomena, the core logic boils down to two points. Understand these, and you won't get caught again.

Let's first look at the most direct reason: the US Treasury bond auctions are "bleeding" aggressively. Currently, with the government shutdown, the Treasury general account has long been drained. Although the Federal Reserve wants to inject liquidity from banks, the absorption capacity of the bond market's "black hole" far exceeds expectations. This round of 3-month and 6-month US Treasury auctions had a nominal scale of 1,630 billion USD, with actual transactions totaling 1,706.9 billion USD. After deducting reinvestments from the Fed, it’s equivalent to directly withdrawing 1,630 billion USD from the financial market. It might not be a big deal in other periods, but now, with the entire market in a tightening cycle, such a large amount of funds being pulled out causes risk assets to immediately struggle. Bitcoin's decline? That’s the most straightforward reaction to capital outflows.

Another blow comes from the hawkish signals released by the Federal Reserve. Goolsby’s recent speeches continue to convey a tough stance, directly crushing market hopes for a rate cut in December. The probability of a rate cut has sharply fallen from nearly 70% to even lower levels. You must understand that expectations of rate cuts are like a "stimulant" for risk assets. When these expectations weaken, market sentiment cools instantly, and pressure surges.

Tight liquidity combined with cooling sentiment creates a double whammy. How well can risk assets perform? Bitcoin bears the brunt. Once pessimism takes hold, a wave of selling begins, intensifying the decline.

But don’t overreact with panic; the path to breaking the deadlock is actually quite clear. Once the government resumes operations, replenishing the Treasury account will release liquidity; if the Fed slows down its overnight reverse repurchase operations, short-term liquidity can also be alleviated. Liquidity cycles are like the changing seasons — the harsh winter will eventually pass. The key for investors is to understand the direction of liquidity trends. Instead of obsessively watching the ups and downs of K-line charts, it’s better to gauge the true market liquidity situation — often, in the days when it’s hardest to endure, the greatest opportunities are hidden.