The recent drastic fluctuations in Bitcoin have led many to experience the extreme transition from financial freedom to total liquidation overnight. This is not simply a matter of ups and downs, but rather the result of multiple intertwined factors. The key lies in the interplay of market sentiment, high-leverage speculation, and external macroeconomic conditions, which have pushed the already high-risk crypto assets into an even more unstable situation.
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Three major drivers of price turbulence
This crash is not coincidental; it is a "perfect storm" formed by the accumulation of various forces:
Sudden macro policy changes trigger panic: The announcement by former U.S. President Trump to impose a 100% tariff on China directly ignited global market risk aversion. Capital quickly withdrew from risk assets, with Bitcoin being the first to be sold off as a terminal asset.
High-leverage bubble bursts: During the price increase, a large amount of capital flooded into the market through 5x, 50x, or even higher leverage. This model can amplify returns during an uptrend, but once the price retraces beyond a certain extent, it triggers forced liquidations, creating a "long squeeze" scenario.
Liquidity instantly dries up: The crash occurred during the early hours of the Asian session when most market makers were off-duty. Particularly, smaller coins lost support from counterparties, leading to a free-fall in prices, with the stablecoin USDe briefly unpegging to $0.62, exacerbating the overall market trust crisis.
User behavior traps behind the liquidation wave
Data shows that the number of liquidations in a single day exceeded 1.6 million, with a total amount close to $20 billion. Behind these numbers are widespread cognitive biases:
Mistaking short-term market gains for personal ability, creating the illusion of "I understand Bitcoin."
Believing "this time is different," ignoring historical patterns, and still choosing high-leverage operations after experiencing multiple fluctuations.
Blindly following "wealth myths" on social media, such as stories of ordinary people doubling their money through leverage, while overlooking survivor bias and enormous risks.
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How should ordinary investors respond?
In the face of such a turbulent market, maintaining clarity is more important than chasing profits:
Do not use high leverage, especially not betting the entire account. The market changes rapidly, and a single fluctuation could completely eliminate you.
Distinguish between investment and speculation. If you do not have sufficient professional knowledge and risk tolerance, the risk of holding a small amount of Bitcoin long-term is far lower than frequent trading or playing contracts.
Focus on real value rather than narrative hype. Concepts like "halving market" and "digital gold" often crumble in extreme market conditions.
Basically, that's it. The volatility of Bitcoin makes it unsuitable for everyone. Understanding the mechanisms, controlling your actions, and leaving enough safety margins are essential to avoid becoming a data point in the next liquidation.