Author: Babywhale, Techub News
A week ago, due to DeepSeek, investors expected that the future demand for the artificial intelligence chip industry chain might decrease. The US stock market, including Nvidia and AMD, began to fall from the night market, and Bitcoin, which has been following the trend of US stocks recently, was also dragged down. This morning in the Asian market, during the night market of US stocks, perhaps due to the US government's announcement on Saturday that it would impose a 25% tariff on Mexican and Canadian imports and a 10% tariff on Chinese imports, Bitcoin continued to fall after a slight decline over the weekend, falling to around $91,000 at around 10:00 Hong Kong time.
In fact, the decline of Bitcoin this morning was not that large, but most tokens, including Ethereum, experienced a cliff-like drop. Ethereum's maximum decline in the past three days was about 40%, and it fell to around US$2,100 this morning. A large number of altcoins even hit new lows since the 2022 bear market.
The contract market is even more bloody. According to Coinglass data, based on the lowest point at noon today, the cryptocurrency contract market liquidation amount exceeded US$2 billion in 24 hours, and more than 700,000 people were liquidated. This figure is even higher than the liquidation funds caused by market panic after the Bank of Japan unexpectedly raised interest rates last year, at least setting a record for the 24-hour liquidation amount in the past two years.
The total market value of cryptocurrencies excluding the top ten cryptocurrencies by market value counted by TradingView fell to around $220 billion this morning, reaching the level from August to October last year.
"The last drop" or "the beginning of a bear market"?
In last Monday's analysis, the author pointed out that after Bitcoin's repeated attempts to break through $106,000 to $107,000 failed, we have reason to guard against short-term pullback risks. Bitcoin quickly rebounded after falling to around $98,000 last Monday, reaching around $106,000 again, making many investors look forward to the "Spring Festival red envelope market" that has been fulfilled for many consecutive years.
But just like last year when Bitcoin rebounded to $70,000 in late July and early August and then quickly fell back, if multiple attempts to break through a certain high point fail, it is likely to lead to a rapid decline.
In the middle of last week, the Federal Reserve announced that it would keep interest rates unchanged and removed the statement that inflation reduction had made continuous progress. The market expected that the Federal Reserve might not cut interest rates in the first half of the year. As soon as this news came out, the risk asset market rose instead of falling. This also provided a good explanation for the decline last Monday to some extent:
Many investors were puzzled by the plunge on Monday caused by DeepSeek's release. They believed that the emergence of DeepSeek would allow many companies to use less computing power to train models, which would help promote and develop AI, and would be beneficial to Nvidia's chip designers in the long run. However, the capital market is often not afraid of certain bad news, but more afraid of uncertain news. This is one of the reasons why Bitcoin was able to quickly recover its losses last week. The short-term decline was due to uncertainty, and the subsequent reversal was more like "even bad news is predictable."
But this time, I want to remind you that the Fed’s subsequent policy path and the impact of Trump’s radical strategy on the global economy have entered a state of great uncertainty. Originally, Trump’s team announced that Trump would not start the process of raising tariffs in the early days of his presidency, but now the fact is that the expected implementation time of this strategy has been advanced a lot, and the impact of increasing tariffs on the US economy is still unknown, which makes the Fed’s next move unpredictable.
The two events that may determine the direction of the capital market have become unpredictable, making the market extremely fragile. Any subsequent disturbance may trigger market fluctuations beyond expectations. Although the author still believes that it is too early to assert a bull-bear market, risk factors are accumulating rapidly in the short term. Even if a large number of policies supporting the development of Web3 are proposed in the future, and even if many states in the United States support government investment in Bitcoin in a short period of time, it may still not be able to offset the impact of macro uncertainty.
Whether it is the gap-down opening of the S&P 500 index futures this morning in Hong Kong time, the gap-up opening of the US dollar index, or the recent record high of gold prices, it indicates that a large amount of funds are choosing to hedge. The other side of Crypto's ability to bring excess returns is the huge losses that many people cannot afford. The author suggests that in a market environment with too high uncertainty, it is better to watch more and do less.
