The sharp decline in the cryptocurrency market over the past three months may seem simple on the surface, but in reality, more than one factor is at play. To clarify this issue, we need to analyze it from three perspectives: external triggers, internal market problems, and macro capital flows.

Let's start with the immediate trigger. In mid-October, a "flash crash" occurred, triggered by negative news about international trade policies impacting global risk assets. As a result, Bitcoin plummeted over 14% within 24 hours, and this waterfall decline triggered liquidations of leveraged positions totaling up to billion USD. One event, two chain reactions.

But the real issues lie within the market itself. Excessive leverage and liquidity risks have long been embedded there. During a bull market, leverage can indeed amplify your gains, but once panic sets in, it turns into a meat grinder for forced liquidations. Even worse, collateral assets like WBTC and algorithmic stablecoins such as USDe can lose their peg under extreme conditions, causing investors' sell-off emotions to escalate instantly. Once liquidity dries up, price declines are infinitely magnified by technical issues.

Now, let's look at the changes in capital flows. Bitcoin spot ETFs have experienced net outflows for several consecutive weeks, indicating a clear cooling of institutional enthusiasm. More troubling is that these funds haven't stayed in the crypto market but have flowed into strong-performing US stocks and safe-haven assets like gold and silver. Long-term holders are starting to realize profits at high levels, further increasing selling pressure.

Ultimately, this decline is not the result of a single cause but a perfect storm of external shocks, internal vulnerabilities, and shifts in macro capital flows.