Article Source: Talk Li Talk Outside
Yesterday (Beijing time, February 3) was the Beginning of Spring, and there is a traditional custom in the folk called "Avoiding the Tai Sui in Spring". Avoiding the spring means that the energy field at the time of the Beginning of Spring is believed to undergo changes, which may have adverse effects on people. 2025 is the Year of the Wooden Snake, and according to folk beliefs, people with the zodiac signs of Snake, Pig, Monkey, and Tiger are believed to offend the Tai Sui, so they need to avoid the spring.
How to avoid the spring? You can find a quiet or closed place, let yourself avoid external interference, maintain a peaceful mentality, and avoid emotional fluctuations.
However, it seems that many people did not avoid it yesterday, because the Altcoin market experienced another massive crash comparable to 312, with BTC dropping to around 91,500, a drop of about 6%. ETH was even more dramatic, with a single-day drop of over 25%. As for other Altcoins, it's not an exaggeration to describe it as a bloodbath.
According to the latest on-chain data, in the past 24 hours, a total of 719,347 people were liquidated, with a total liquidation amount of 2.289 billion, of which 1.819 billion were long positions and 470 million were short positions. As shown in the figure below.
This morning, I was still writing an article with my head covered, but a few hours later, I came back to find that it had already crashed... Unfortunately, I missed the scenery at the 2100 level of Ethereum.
Remember March 12, 2020, when there was also a big crash, with Bitcoin dropping from around $7,900 to around $3,800, a drop of about 52%. ETH dropped from around $200 to around $86, a drop of about 57%. (The data may vary slightly across different statistical platforms, and you can check the historical data yourself.)
However, this 203 crash is different from the 312 crash. First, BTC's performance is relatively more resilient, and second, ETH's drop is more severe relative to BTC. Although I have always been more optimistic about ETH's long-term development, and have discussed the topic of Ethereum in recent articles, ETH in this cycle seems to be out of the ordinary, and it has never disappointed in terms of disappointment. Because I have written a lot about Ethereum recently, I have indeed been scolded by the background messages, and today I have blocked several "little darlings" who came to scold me. Well, I will also try to restrain myself in the next few days and mention Ethereum less, so as not to continue to incur the wrath of the masses.
As I write this, I suddenly also recall the words hanging on the wall of the office of my former employer: "Find hope in despair, and life will eventually be brilliant." This sentence seems to be able to express my personal expectations for ETH.
1. What might the market do next?
In fact, I really like this kind of waterfall opportunity. In the previous article (February 3), I even casually shared my plan for this cycle, in which you can see that I have a 10% C-level position that I haven't touched, just for dealing with situations like 312 and 519. However, the 203 waterfall doesn't seem to be shocking enough, and since I was in seclusion writing an article that morning, I didn't make any supplementary trading operations.
And for crashes like 312, 519, and 203, we don't need to deliberately look for reasons, because looking for reasons afterwards is of no use to our positions. As I said in the previous article: We deeply sympathize with those who were liquidated, but for the market, more liquidations are healthier.
If you've been through the previous 312, or you can directly look at the K-line, you can also see that each time there is such an extreme situation, it will be accompanied by a huge amount of liquidation, and after the liquidation, after a period of adjustment, there will often be a unilateral upward trend or even a new ATH breakthrough. (Historical market performance does not represent the present, nor can it directly predict future performance. DYOR)
Dare to "All In" on BTC at 100,000, dare to "All In" on ETH at 4,000, dare to "All In" on MemeCoin that could go to zero at any time... Now what's wrong? You're afraid of the once-in-a-few-years big waterfall opportunity?
Of course, maybe some people haven't been afraid, but it's just that they were too bold before, always liking to randomly "All In" with tears in their eyes, which has led to their current inability to move.
As of the time of writing this article, the market has also started to rebound, although ETH has not yet reached 2,800, but BTC has returned to above 100,000. Yesterday, I also saw a partner in the group share an interesting comparison, which shows that ETH really hasn't disappointed in terms of disappointment. As shown in the figure below.
However, the rebound is still a rebound, and you shouldn't just go long again as soon as you see a rebound. In this volatile market, going long or short can easily "kill" yourself. If you still have a position, you can take the opportunity of a 203-level waterfall to pick up some cheap spot positions. If you don't have a position, then you can re-think and plan your position management.
As for the possible market trend going forward, I'll directly quote the views of some partners in the group (omitting names/nicknames to protect their privacy):
A) The weekly chart shows a "bearish engulfing", and combined with the MACD, it may continue to pull back. In addition, the 3-day chart also shows a "bearish engulfing", and the short-term outlook is not optimistic, the uptrend line has been broken, so let's wait and see. As shown in the figure below.
B) There will be another wave from the 8th to the 18th, and be careful on the 4th.
C) Looking solely at the changes in the fundamentals, the direct cause is the US tariff policy, but the background is the lowered expectations of rate cuts, that is, the fundamentals changed on December 20 when the expectations of rate cuts were lowered, and such negative news will be amplified indefinitely. Combined with the "Fierce Tiger Descends the Mountain" and the monthly line pinbar technical analysis at the time, as well as the impact of AI bursting the US stock bubble on Altcoins, which was also mentioned in the group a few days ago, this is one of the main reasons why this round of AI has fallen the most.
Of course, other partners have also expressed their personal views. In short, the market is volatile, and people's minds are also volatile. Some remain pessimistic, while others remain optimistic. But whether to participate in buying/selling, what to buy/sell specifically, and how to buy/sell reasonably... the decision power on these issues actually lies with you.
I'm not good at giving trading guidance, and I don't want to do that either. I can't provide too many clear buy/sell recommendations for others. At most, I mainly use the "Talk Li Talk Outside" bridge to remind everyone to do a good job in position management and risk management, and provide some personal experiences, views or ideas related to the Altcoin market, that's all.
Now the market has come to a new crossroads, some will choose to get off the car, some have already been thrown off the car, and some will take the opportunity to get on the car. Which one are you?
As for me, I will continue to maintain a relatively optimistic attitude. I won't be thrown off the car (but I actually got off the car in batches last December, which was mentioned in the article on February 3). I will still stick to the view expressed in the previous article: We haven't entered a bear market yet, and this bull market cycle hasn't completely ended yet. At least I haven't seen a 100,000 BTC bear market (maybe I'll see it in 5 years). But the risk will be greater as time goes on, and the time left for this bull market cycle is getting less and less. Based on your own position and risk preference, you can continue to maintain your existing strategy and pace.
The best operation in the bull market stage is to sell in batches, and it is more difficult to maintain wealth than to create wealth in the bull market. Especially for newcomers, don't use leverage casually, don't play contracts casually, and don't "All In" to buy the dips casually. These may cause your assets to be wiped out or be trapped at the top.
The core logic or gameplay of the market is to make as many people lose money as possible. Therefore, we see all kinds of so-called news factors, the more institutions and people participate, the more complex the market cycle will become, which is why the bull market in 17 was relatively easier to make money than the bull market in 21, and the bull market in 21 was relatively easier to make money than the current bull market.
Especially in the current environment of weak consumption, most people (mainly retail investors) no longer have or will not put so much capital into investments, especially in the high-risk field of investments. Life is already difficult, let alone getting into investments.
Of course, except for gambling dogs and those with dreams of overnight wealth, but to be honest, rather than gambling in this field, it's better to go directly to Macau, at least there you can lose money clearly without having to learn more knowledge, sit in front of the computer bored watching the chain, or spend time and energy on project research, although the outcome of gambling may be the same, at least in Macau you can lose clearly.
2. Let's also talk about the US tariff issue that everyone has been focusing on these two days
In fact, the US tariff policy is not just a day or two, Trump said before taking office that he would increase tariffs, and this expectation has always been there, it's just that the tariff policy these two days has given the market a relatively sufficient reason for the decline. The market needs to clear leverage, but the decline still needs to find a reason, and the implementation of tariffs is a good reason.
But can the impact of tariffs on the economy (the US economy) be immediately apparent?
This is actually a matter of finding a balance between short-term pain and long-term gain. Yes, tariffs can promote domestic production in the US, but the final transmission effect may take years, it's not that the tariff policy is implemented today, and the foreign goods become difficult to enter, and the domestic enterprises can immediately produce all kinds of needed things.
From a short-term perspective, the tariff policy will indeed directly lead to a strengthening of the DXY (US dollar index) and a decline in various risk assets (stock market, crypto market), because from a long-term perspective, tariffs may re-ignite the risk of inflation, causing enterprises and consumers to face the blow of rising costs and shrinking profits, and many funds need to choose to take a defensive layout.
As for how much impact this short-term and long-term perspective can have, this may depend more on the trade volume between the US and other countries (such as Canada, Mexico and China), if the trade volume is large, the impact, or the impact on the global economy, will certainly be huge, and this will certainly destroy the liquidity of the market to a greater extent.
And the current Trump's tariff war has just begun, note that it is the beginning, not the end, and no one knows what tricks Trump will play with tariffs next, it is said that the US may continue to increase tariffs on the EU, and under this "expectation", the market triggering a plunge also seems to be a reasonable reason.
3. A plunge is not terrible, what's terrible is that your position is gone
For retail investors (especially those who have experienced 2-3 bull and bear cycles), what is a 20% plunge? The 94% plunge in 2017 (Bitcoin fell more than 40% in a few days), the 312% plunge in 2020 (Bitcoin fell more than 50%), the 519% plunge in 2021 (Bitcoin fell more than 30%), we have all experienced these.
And a plunge like yesterday's 20% level, in fact, also happened once last year, on August 5, 2024, the Bitcoin price directly fell from $58,200 to the $49,500 support line, with a single-day drop even greater than yesterday's drop, I wonder how many people still remember the situation at that time.
A plunge is not terrible, what's terrible is that your position is gone. Only after a plunge, only after the long positions are liquidated, can the market go through a consolidation and then continue to move up lightly. At the same time, don't forget the catalysts we've outlined in previous articles, including:
- More Altcoin ETFs are still likely to be approved this year
- The US crypto strategic reserve plan is still expected
- More countries are also exploring the issue of crypto currency reserves
- Large institutions are still deeply involved and deploying in the crypto field
- and so on...
I'd also like to mention the thing about El Salvador the other day, don't be misled by some self-media who like to exaggerate, saying that El Salvador caused the market plunge, they were still buying Bitcoin on February 1, and announced the cancellation of Bitcoin's legal tender status on February 2. To be honest, if someone promised me a huge loan on the condition that I acknowledge that the US belongs to China, I would certainly acknowledge it without hesitation, getting the money is more important than anything else. As shown in the figure below.
In any case, don't let panic take over your position, keep your own strategy and rhythm plan, and continue to maintain focus and thinking. In prosperous times, see the bubble; in excitement, think about the crisis; and when everyone is panicking, bring out the position you can bear the risk to bravely seize the opportunity.
