Last night, both ETH and Bitcoin suddenly plunged, causing 340,000 traders to get liquidated and be left stunned.

Many are asking: "This drop was so sudden—what exactly happened?"

In reality, the so-called "mysterious crash" is always backed by a clear chain of logic—it's just that most people tend to focus on candlestick charts and overlook the real lifeline: capital flow.

Markets never rise or fall without reason. Every sharp fluctuation fundamentally stems from liquidity issues.

The trigger this time was actually hidden within the U.S. Treasury market.

The U.S. debt market is like a super cash magnet. Recently, with the U.S. government approaching a shutdown, the Treasury's General Account (TGA) is nearly empty, and market liquidity is tight. To make matters worse, there's a $163 billion Treasury auction happening right now—equivalent to draining blood from the market’s core. Massive funds are being siphoned into debt instruments, causing risk assets to "bleed out."

So, that big red candle last night wasn’t accidental; it was an inevitable outcome.

What you see as falling prices is actually funds fleeing en masse.

Even more concerning is the Fed’s hawkish signals. Comments from officials like Goolsby have dashed hopes of a rate cut in December. The risk capital that was counting on lower rates suddenly lost direction—those who should sell or cut losses are doing so, with Bitcoin bearing the brunt of the damage.

But is this truly the end of the world?

On the contrary, it’s just a shift in market rhythm.

Liquidity is like the tide—when it recedes quickly, it often comes back with even greater force. Once the government resumes operations, replenishes the TGA, and relaxes reverse repo policies, the withdrawn funds will eventually flow back into the market. History has repeated this cycle countless times.

Many people panic, sell off their holdings, or blame the market makers during such times—yet they’re making the same mistake: focusing only on price swings and ignoring the underlying capital flow.

The short-term pain is actually a process of clearing out weak hands. Those who understand liquidity dynamics can position themselves early amid the chaos.

Remember this principle: a decline is an opportunity for chip rotation; panic signals emotional transmission.

When others are liquidating, observe the rhythm; when they retreat, assess the direction.

Don’t gamble on wild swings—follow the flow of capital. That’s the core logic for navigating market cycles.

When clear signals of capital returning emerge, it might be the perfect time for your next move.