After so many years of watching the markets, I find it’s becoming harder and harder to get scared. Do you know? Those who experienced the cold winter of 2018 see today’s fluctuations as pretty minor. Back then, I was fully invested and holding on, watching my assets shrink to almost nothing — that feeling is unforgettable for a lifetime. It’s because of that experience that now, when faced with this kind of collective pullback, I feel quite at ease. I understand that it all boils down to just two main factors; once you get them, there’s no need to scare yourself.

**First Factor: The Liquidity Game**

Don’t be fooled by the recent sharp declines; it’s not that assets are failing, it’s simply that the market’s money supply is temporarily tight. Look at what the US Treasury is doing lately: reducing spending on one hand, while issuing large amounts of debt to fill the gaps on the other. What does that mean? It’s like drawing water out of a big pond — the entire financial market is that pond. When the water level drops, all the boats floating on it start to sink. But that doesn’t mean the boats are broken; it’s just that the pond is shallower for now.

I see some people criticizing Bitcoin and stocks after a single day of decline, saying they’re no good. But honestly, they haven’t thought through where the money is flowing. The movements of big funds determine the market’s temperament. When US bond yields rise and the attractiveness of risk assets diminishes, money naturally flows out of stocks and crypto. That’s a phenomenon, not the ultimate result.

**Second Factor: The Collapse of Expectations**

There’s an even more direct reason — the dream of rate cuts has shattered. Recently, the market kept saying that the Fed would loosen monetary policy this year, and that liquidity would ease. This expectation supported many people’s confidence and kept asset prices buoyant. But then, Fed officials suddenly said “not in a hurry,” and market expectations shattered instantly.

Guess what happens next? When that sentiment breaks, more people start to panic and sell, causing prices to fall even faster. The more they fall, the more people feel something’s wrong, and they follow the trend to dump their holdings. This creates a panic-driven stampede. But fundamentally, it’s just emotions at play, and has little to do with the long-term value of these assets. Emotions come quickly and go just as fast — that’s the market’s temperament, and also where the opportunities lie.

**So, what’s the conclusion?**

This is definitely not the start of a bear market; at most, it’s a summer thunderstorm. The rain may be heavy, but it won’t last through an entire season. Once the government reopens the floodgates of liquidity or the Fed’s stance shifts slightly dovish, funds will naturally flow back in. Assets that have been beaten down will recover quickly, and the market will rebound accordingly. I’ve seen this happen more than once.

The key is to hold steady and not let emotions take over at the most critical moments. Those who panic and sell at the bottom often regret it the most during the rebound. I watched many people run away at the bottom in 2018, only to grind their teeth later. I’ve paid that tuition — now I’m just waiting.