Last night's market movements, to be honest, were more疯狂 than a roller coaster. Bitcoin suddenly broke through the $86,000 level, and Ethereum plunged below $2,800—down 14% in a single day. The futures market completely exploded, with nearly $800 million in Bitcoin long positions liquidated. This isn't just a correction; it's a slaughter.

After years in this circle, I want to say something honest: on the surface, it looks like a technical breakdown, but the deeper reason points to one issue—liquidity is being ruthlessly squeezed.

Let's start with the trigger. At the end of October, a major central bank cut interest rates by 25 basis points, but officials quickly turned hawkish, emphasizing sticky inflation and opposing aggressive easing. The market had expected continued rate cuts by the end of the year, but this was a blow to that expectation. This turning point is crucial, but many people haven't truly understood the logic behind it.

On the surface, rate cuts seem like easing, but in reality, it's a "hawkish test"—this is the core problem. Currently, inflation remains around 3%, well above the 2% target. Meanwhile, employment data is surprisingly strong, with some months showing non-farm job gains far exceeding market expectations. In this context, the central bank dares to cut rates, not to "rescue the market," but to manage economic risks. Once subsequent data improves, they will immediately tighten the policy.

The result is that capital markets are starting to reprice. The correlation between cryptocurrencies and the Nasdaq has surged to 46%, and the narrative that crypto assets are a "hedging tool" has been completely exposed at this moment.