Institutions and retail investors alike have suffered losses in this round of panic selling. The market opened with a sharp plunge, with the Nasdaq and Bitcoin nearly dropping simultaneously, and the community was filled with lamentations. But honestly, blaming this decline simply on a "black swan" event is a bit superficial. My view is different—this is not an unexpected incident at all, but a long- brewing liquidity crisis.

Imagine three "pumping machines" operating simultaneously, draining all the blood from the market, leaving no asset unscathed.

**First Punch: Crazy Capital Inflows into the Treasury Market**

After the government rebooted, it directly issued $163 billion in Treasury bonds. Don’t think of this just as borrowing money; in reality, it’s a hard extraction of a large amount of liquidity from the market. Once this money enters the Treasury market, sectors like stocks and crypto, which rely on hot money, start to run out of blood. This isn’t some conspiracy; it’s the basic logic of capital flow. With risk-free returns in front of them, who would still be willing to gamble on that virtual stuff?

**Second Punch: The Federal Reserve Suddenly Changes Course**

Previously, the market was hoping for rate cuts to rescue the economy, but the Fed came out with "no rush to cut rates." This statement’s impact is more powerful than most people think. Leverage funds, hearing this, turn around and run, and the panic of chain liquidations doubles the decline. Looking at the liquidation data makes it clear—recently, the crypto market experienced a staggering amount of liquidations, with $19.2 billion wiped out on October 11 alone. This isn’t just emotional volatility; it’s real capital panic.

**Third Punch: Bank Liquidity Is Also Shrinking**

The overnight borrowing rate in the interbank market has soared, indicating that the financial system itself is under stress. When the entire system is waterless, risk assets are the first to be thrown out. Once a liquidity crisis is triggered, no asset can remain unscathed.