During that wave of panic selling in the early morning, I saw the WeChat groups explode with activity, with many people shouting that the bull market is over. But after looking closely at the data, this isn’t really a trend reversal; frankly, it’s just liquidity being drained from the market.

The U.S. Treasury is aggressively issuing government bonds, causing liquidity in the market to tighten immediately. The Federal Reserve then signals that interest rate cuts should be gradual. Those hot money funds that were waiting to be pumped in suddenly see something wrong and start to withdraw. High-volatility assets like Bitcoin are naturally the first to be hit, which is no surprise.

But this has little to do with Bitcoin’s intrinsic value. Think back to March 2020—prices were hammered even more severely, yet it rebounded in a V-shape afterward. The key is to see clearly where the money is flowing and which way the market winds are blowing.

Over the years, I’ve suffered quite a few losses myself. Now, when faced with such sharp declines, I rely on three old tricks to cope. They’re nothing fancy:

**First: Absolutely don’t cut your losses.** When the market plunges into panic, there are cheap bargains everywhere, and those assets that usually stand tall suddenly become dirt cheap. The ones most likely to panic and sell are those without confidence. If you panic and sell recklessly, you just play into the hands of certain institutions. The more frightening it gets, the more you need to stay calm and hold your ground.

**Second: Take small bites when catching flying knives.** Don’t dream of buying at the absolute bottom every time—that’s unrealistic. My usual approach is to buy small amounts each time the price drops, gradually lowering my average cost. When your average cost is reduced, your mindset stabilizes, and you can withstand even bigger fluctuations.

**Third: Pay attention to policy rather than just K-line charts.** Don’t spend all day drawing lines on charts. Focus more on the movements of the Federal Reserve and fiscal policies. When they loosen their tone, market expectations for liquidity change, and that’s often the best time to reposition. This is much more reliable than studying technical indicators.

This time is no different. While many follow the trend and cut positions, I stick to my own rhythm. When prices fall, I buy some more, and my costs become more comfortable. Once the wind shifts, I’ll naturally see the results.