The market sentiment has been extremely suppressed lately. Bitcoin, which peaked at 125,000, has fallen nearly 30%, and when it broke below the $90,000 mark, there were voices everywhere on social media saying "The bull market is over." But having been in this space for so many years and gone through several cycles, I’m sensing a different flavor this time.

Honestly, this decline is mainly due to the sudden shift in expectations of Federal Reserve rate cuts. Once the probability of a rate cut in December dropped below 50%, high-risk assets started to suffer. Interestingly, although BTC has retraced so sharply, the US stock market is still reaching new highs. Behind this divergence, there’s actually a hidden risk of liquidity mismatch—a credit event is slowly brewing.

The data tells the story. In the past 24 hours, long positions were liquidated for as much as $650 million, while short positions only $280 million, showing how thoroughly leveraged longs have been wiped out. The US dollar liquidity index has been weakening since July, sounding an early alarm for the market.

But this also signals that a turning point is near. The US Treasury general account balance has dropped from $745 billion at the end of last year to $500 billion, indicating a large amount of liquidity is flowing back into the market. The short-term pain is actually a necessary process to lay the groundwork for next year’s market. This time window is the real opportunity for strategic positioning.