The sharp crash at 3 a.m. kept many people awake all night.

When Bitcoin's big red candle dropped, the numbers in accounts instantly turned a glaring shade of red. The chat groups were filled with curses—"Which damn whale is messing around now?" Retail investors kept staring at the candlestick charts, trying to find answers, but they completely missed the point—this drop was driven by liquidity being sliced open.

Let's start with the first cut: the U.S. Treasury auction, this bloodletting machine.

How desperate is the market for cash right now? The Treasury's TGA account has long run dry, yet they still scheduled a $163 billion Treasury bond auction. You might think that number isn't huge, but in a liquidity-tight environment, it's like pulling $163 billion directly out of the financial market's ammunition. Even worse, the Fed's liquidity injections into the banking system are nowhere near enough to fill the bottomless pit of the bond market.

High-volatility assets like Bitcoin are extremely sensitive to capital outflows. Just like a person who loses blood will faint first, assets losing their liquidity support will inevitably fall. This isn't a technical issue; it's a matter of blood—liquidity—running low.

Now, the second cut: the Fed's hawkish stance.

As soon as Goolsby made that statement, the market cooled off—expectation of a rate cut in December plummeted from 70% to less than 50%. The anticipation of rate cuts used to be a stimulant for risk assets, but now that expectation has collapsed, and sentiment shifted instantly from optimism to panic.

Add in the liquidity crisis, and selling becomes a stampede: the more prices fall, the more panic ensues, leading to more selling. But to be blunt, most people are losing money because they only focus on price movements, ignoring the bigger picture—how the "liquidity" hand is manipulating the entire game.

However, even in this winter, there are opportunities.

Once the government restarts its operations, the TGA account will be replenished, easing liquidity tensions. Today's sharp decline is more like the market digesting short-term pressure. Those who truly understand liquidity dynamics know where to scoop up bargains.