2025-12-31 02:22:28

A market that was just stable and trending upward a second ago can suddenly plunge the next. When I opened the candlestick chart yesterday early morning, I believe many people felt it — Bitcoin sharply declined, and the US tech sector also followed lower.

It may seem sudden, but in fact, it’s not. This wave of adjustment has long been foreshadowed in the shadows of liquidity.

**Where is the liquidity disappearing to?**

Recently, the US fiscal system’s general account has remained at a low level. Meanwhile, the bond market is like a nonstop pump, continuously draining liquidity from risk assets.

The recent US Treasury auction is a good illustration: with a face value of 163 billion USD, it was ultimately sold for 170.69 billion USD. What does this extra amount mean? It indicates that market participants are pulling out real dollars from their pockets to purchase these bonds. Switching from risk assets to safe assets essentially means pulling real money out of liquidity-sensitive assets like Bitcoin and stocks.

When liquidity is abundant, such adjustments are hardly noticeable. But now, it’s different — the market is like a tightly stretched string; just a slight external force can cause intense resonance. Bitcoin and tech stocks, as the most vulnerable risk assets, naturally become the "drain outlet" for liquidity contraction.

**Institutions are taking action**

It’s not just the bond market that’s exerting influence. The withdrawal of institutional funds is also accelerating — clues can be seen from changes in ETF holdings. These participants, often regarded as "smart money," start adjusting their positions at the first sign of liquidity shifts.

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HashRatePhilosopher

· 8h ago

Liquidity really is one of those things that, once there's a little wind or disturbance, everything is doomed. I saw yesterday's plunge clearly. Institutions run faster than anyone else, while we retail investors are still there picking up the pieces. This bond pump is no joke, forcibly siphoning US dollars out of my pocket. Speaking of which, this correction was long overdue; I'm just worried there might be even more severe ones ahead. ETF holdings are constantly changing, smart money has already caught the scent. What about us?

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ChainPoet

· 8h ago

Here we go again, trying to pretend it's not obvious this time? The old trick of draining blood from the bond market. Institutions have already run away, and we're still taking the bait.

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ConfusedWhale

· 8h ago

Liquidity contraction sounds impressive, but it actually just means there's no money left. Smart funds are fleeing faster than anyone else, and we retail investors are still studying charts haha. Big institutions have always been ahead of the curve; they've long seen through the bloodsucking in the bond market. At that moment in the early morning, I was thinking, this is definitely not a coincidence, it’s just that the strings are being pulled too tight again. This is just the beginning; tight liquidity is truly the biggest killer, more ruthless than any technical analysis. I experienced this last year; every time, institutions were laying out their plans in the shadows, catching retail investors off guard. Details like the $7.6 billion oversubscription in the US bond auction are usually unnoticed by most people, but these are signals. If it drops again, I’ll start buying the dip. Anyway, there’s no bottom anymore haha. Institutional funds are withdrawing too quickly; there should have been early data from ETFs, but we are only catching up now.

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ETH_Maxi_Taxi

· 8h ago

Here we go again with this story; no matter how elaborately you talk about liquidity, it can't change the current situation.

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