2025-12-17 13:21:19

The recent digital asset market can be described as a tale of two extremes. On one hand, Bitcoin has fallen from $95,000 to $85,000, with 200,000 traders liquidated within 24 hours and $600 million evaporated directly. On the other hand, the US stock market's crypto-related stocks are rebounding, with Circle's single-day increase approaching 10%, and JD.com has also restarted its digital collectibles business. Looking at the macro environment, the Federal Reserve's rate cut wave, Trump's sanctions on Venezuela, and the uncertainty over the Federal Reserve chairmanship are all subtly stirring the market.

Let's first discuss the most practical part—why has BTC dropped so sharply these past two days? Frankly, three factors have stacked up.

On December 11, after the Federal Reserve's meeting, Powell's remarks directly shattered the market's dreams. Investors previously thought rate cuts would be routine, but the signals he sent were more hawkish, instantly reversing market expectations for liquidity, and risk assets began to loosen. Meanwhile, the Bank of Japan is set to raise interest rates on December 19. This may seem unrelated, but it will actually trigger large-scale unwinding of yen arbitrage trades. Japanese retail investors and hedge funds will rush to withdraw yen funds, directly pulling liquidity from the global markets, with the crypto market bearing the brunt. Additionally, with Christmas holidays approaching, starting from the 23rd, the market has entered holiday mode, trading volume has decreased, liquidity has become increasingly thin, and price volatility has been amplified infinitely.

These three factors together have created this "kill shot." While institutions haven't exited at this point, some are actually still positioning themselves, which is a signal worth noting.

BTC1,99%

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.

18 Likes

Reward
18
5
Repost
Share

Comment

0/400

FlashLoanLarry

· 2025-12-20 10:54

yo the liquidity extraction here is absolutely *chef's kiss* — hawkish fed pivot + BoJ tightening + holiday thin books = capital utilization nightmare for retail. institutions loading dips while everyone panics over basis points... told y'all this was opportunity cost in disguise

Reply0

CompoundPersonality

· 2025-12-19 13:12

1. Powell this wave really nailed it, isn’t it? Breaking the dream must be the real culprit behind the liquidation chaos, right? 2. Hold up, institutions didn’t run but instead are deploying? Are they bottom-fishing or playing mind games? 3. I get the liquidity crunch during Christmas holiday now, no wonder the volatility is so wild.

View OriginalReply0

ExpectationFarmer

· 2025-12-17 13:50

200,000 traders liquidated, 600 million evaporated... This downturn is really brutal, retail investors are bleeding profusely. --- Powell's remarks indeed cut off the last straw, the market's dream is shattered. --- Are institutions still deploying? Alright, I'll see how they play it. --- Once the Christmas holiday mode kicks in, liquidity dries up, and the coin prices will take a hit. --- Japanese rate hikes, hawkish Fed, holiday liquidity... a triple strike that directly broke the market. --- Wait, Circle up 10%, JD.com reboots collectibles? The market's a bit chaotic. --- On the yen arbitrage closing, I didn't expect it to impact crypto so much. Learned something new. --- Institutions didn't run away but instead are deploying. If that's true, it will be quite interesting.

View OriginalReply0

SatoshiHeir

· 2025-12-17 13:49

It should be pointed out that the logical chain behind this wave of decline is actually very clear, but most people are still using the primitive term "panic selling" to explain it. Powell's remarks essentially disprove the market’s expectation of liquidity easing — this has already been demonstrated in my on-chain analysis report. Arbitrage unwinding caused by the Bank of Japan's rate hike? According to data at the white paper level, this is nothing new; it happened as early as 2019. What’s truly interesting is that institutions are still quietly positioning themselves, which precisely shows the resilience of the underlying value consensus. Bitcoin has never existed because of macro factors; macro is just an appearance of price fluctuations.

View OriginalReply0

FOMOmonster

· 2025-12-17 13:29

200,000 people get liquidated, 600 million gone, it's really unbelievable, there's no way to avoid this wave Powell is just here to cause trouble, as soon as he speaks, the coins plummet Interest rate hikes in Japan, liquidity here evaporates instantly, a perfect match Before Christmas holidays, it's all like this, the end of the year is full of knives Are institutions still bottom-fishing? Fine, I just want to see how long you can keep doing it Falling so fiercely, I don't even know where the bottom is, feels like another hit could come at any time This time, it’s really about timing, geography, and people—completely targeting the coin price What are the 200,000 liquidated guys thinking right now? Three factors stacking up, it's hard not to fall Holiday market is the most annoying, who’s still trading at this time?

View OriginalReply0