From the plunge in gold to SpaceX's IPO: Who drained the last drop of water from this round of the crypto circle?

Currently, this round of the crypto market’s “continuous decline” can be understood as a combination of multiple external negative factors (precious metals, US stocks retreating, IPO bloodbath, shift in monetary policy expectations) layered with internal capital structure issues. After the sharp drop in October, the portion of positions that “didn’t have time to run” was also washed out, causing the trend to evolve from “strong oscillation” into a clearer bear market phase.

In this context, using the “carving a boat” cycle experience as an analogy for estimation, it is historically relevant to consider that the true cycle bottom from the peak occurs roughly one year later, with the main direction around September of this year. The price range is likely to retest near the previous bull market high (around 60,000), forming a stage bottom, but there will be several sharp rebounds and emotional swings along the way.

1. External Markets: The “Unified Reversal” of Gold, Silver, and US Stocks

From a macro asset perspective, recent signals show not only a correction in the crypto space but also weakening momentum or even stagnation and retracement signals in gold, silver, and US stocks. This indicates that “risk assets are collectively deleveraging,” rather than crypto alone having issues.

The “Passive Consequence” Logic of Precious Metals

Gold often acts as a safe haven during geopolitical risks and high inflation expectations. However, once inflation subsides, real interest rates rise, or markets start trading on “longer-term high interest rates,” gold tends to shift from an acceleration phase into consolidation or correction.

Silver, which has both precious and industrial metal attributes, is more sensitive to macro expectations. Historically, after sharp rises, silver’s crash often involves massive leveraged long liquidations and margin calls. To meet margin requirements, institutions tend to sell more liquid and tradable assets first, including Bitcoin, Ethereum, and other quickly liquidatable assets.

The “Selling Coins to Cover Margin” Effect Triggered by Silver Plunge

When leveraged longs are margin-called, traditional institutions don’t just liquidate their positions in the original asset; they manage their portfolios holistically, viewing all highly liquid assets as “sellable chips.” Crypto assets, with T+0 settlement, high liquidity, and global trading, are very suitable as emergency cash sources.

This creates a common chain reaction: Silver plummets → Margin calls → Selling of long positions (including US stocks, broad ETFs, BTC/ETH, etc.) → Accelerated decline in crypto markets and amplified panic volatility.

US Stocks’ High-Level Stagnation and Risk Appetite Cooling

After valuation surges driven by AI and tech stocks, US stocks are now in a relatively high valuation zone historically. Some indices and popular tech stocks’ forward P/E ratios are significantly above long-term averages, indicating optimistic expectations for future earnings growth.

If economic growth underperforms, earnings guidance is lowered, or the Fed delays rate cuts, funds will retreat from overvalued assets, leading to a general risk appetite decline. This puts additional pressure on high-beta risk assets like crypto.

A straightforward example: When leading tech stocks in US equities start sideways trading or decline, many multi-asset managers choose to “reduce portfolio risk.” They simultaneously cut holdings in growth stocks and crypto assets to lower overall volatility. This “passive deleveraging” usually exerts a slow but persistent downward pressure on prices.

2. Year-End and Pre-Chinese New Year: Cash Flow Tightening and “Realization Pressure”

Year-End Settlement Cycles

Institutions: Yearly assessments, dividends, redemption waves, tax arrangements all encourage institutions to lock in profits and reduce exposure to high-volatility assets. Due to their volatility and relatively marginal regulation, crypto assets are often among the first to be trimmed.

Individuals: Around year-end and before the Spring Festival, many need cash (family expenses, mortgage payments, year-end consumption). Many choose to sell part of their investments to cash out. Crypto assets, with concentrated profits and good liquidity, tend to become “ATM machines.”

Liquidity Deterioration Before Lunar New Year

Pre-Festival: Risk appetite declines, leverage-willingness diminishes, market makers and large holders reduce inventories and control positions to prevent black swan events. This directly reduces overall on-chain and exchange trading depth.

During the festival: Participation from some Asian funds drops, trading hours shorten or enthusiasm wanes, market depth weakens. When medium-sized sell-offs occur, they can easily “blow out big gaps” in the order book, amplifying declines.

Post-Festival “Liquidity Recovery”

After the Spring Festival, rigid expenses subside, and some investors reinvest idle funds, leading to improved market activity. Although the market may not immediately reverse, trading volume and buy-side support tend to be better than the two weeks before the festival.

If positive news coincides—such as easing macro expectations, regulatory signals turning slightly positive, or major corporate events (halving, mainnet upgrades)—a “oversold rebound” or even a phase reversal can easily occur.

3. Confirmation of a “Real Bear” After October’s Drop: The Late Escape

This decline has a key feature: it is not a single flash crash but a prolonged downward drift after October’s plunge, gradually eroding the patience of funds that initially thought “they could hold on a bit longer.” The market’s consensus on a bear trend begins to be widely accepted.

October’s Drop: The First “Warning”

This sharp correction in October is essentially a risk release signal in the late stage of a bull market: high leverage is liquidated, short-term sentiment shifts rapidly from greed to fear. At the time, many still believed “this is just a big correction in the bull.”

Because prices remained relatively high after the correction, and sideways or slow rebounds followed, many were misled into thinking: “The market is stabilized,” just washing out some floating profit.

Funds That Didn’t “Run” Are Now Really Running

During the October crash, some funds didn’t truly reduce their positions due to being caught off guard, still holding onto the hope of a bull market, or being locked in. These people often wait for a rebound to “observe further.”

When prices continue to decline below key support levels with weak rebounds, these hesitant funds shift into “surrender mode”: no longer focusing on long-term logic, but just wanting to “sell quickly if there’s still profit or less loss.” This causes the illusion of market stability to suddenly vanish, and the real escape begins now.

Self-Reinforcing Bearish Sentiment

Market pricing has a strong narrative component. Once mainstream opinion shifts from “long bull” or “super cycle” to “bear market has arrived, long-term adjustment,” capital behavior changes structurally:

• New capital inflows decrease: fewer retail and institutional investors allocate to crypto.
• Existing funds hedge or reduce positions, or shift to more stable yields like fixed income or blue chips.

Once this expectation is reinforced, it creates a negative feedback loop of “drop—pessimism—further drop,” making it difficult for prices to stabilize even at reasonable or undervalued levels, requiring time to digest.

4. The “Super Large IPOs” (SpaceX, AI Giants) and the “Bloodletting Effect” on Crypto

2026 is widely regarded as the “year of super large IPOs”: besides SpaceX, AI giants like OpenAI, Anthropic, and others are preparing or discussing listings, with valuations extremely high, exerting a “money-sucking” effect on global liquidity.

Below is a simple comparison of these IPOs’ scale and their impact on capital:

SpaceX, with actual cash flow and clear growth stories (Starlink, commercial launches, space infrastructure), is widely recognized by traditional institutions, despite high valuation, because of solid narrative.

AI companies like OpenAI dominate the current tech narrative and are “must-explain-why-not-buy” assets in institutional asset allocation frameworks. This compels many fund managers to heavily invest in these IPOs.

Position Reallocation Before and After IPOs

Pre-IPO: To reserve subscriptions and build positions in the secondary market, institutions typically start reducing holdings in other high-beta assets months in advance, lowering overall risk exposure.

Post-IPO: If the new stock performs strongly, some funds shift their capital from crypto and growth stocks to chase the new high, reducing crypto’s relative attractiveness.

Mid-term Implication for Crypto

In the medium term, these large IPOs shift the market focus from “crypto stories” back to “real tech and AI stories,” squeezing crypto valuation premiums. Only new applications (more mature L2s, on-chain finance, RWA) can attract fresh capital.

Until these mega IPOs are digested and valuations balance out, crypto will struggle to regain risk appetite funds.

5. Trump Nominates Federal Reserve Chair: Hawkish Shift and “Diminished Rate Cut Expectations”

On the political front, Trump’s nominee for Fed Chair is more hawkish, changing the market’s previous expectations of “long-term easing.” Although not yet in office, this already influences market sentiment.

What Does a Hawkish Shift Mean

Hawkish monetary policy generally emphasizes:

• Controlling inflation even at the cost of short-term growth.
• Being less eager to cut rates, and considering tightening when inflation shows signs of rising.

This directly affects risk-free yields: if markets believe interest rates will stay higher longer, the discount rate for future cash flows increases, putting pressure on high-valuation assets.

Reduced Rate Cut Expectations and Its Impact on Crypto

Crypto valuations are highly dependent on “liquidity environment”: easing—leverage—risk appetite—valuation expansion, which has been the main theme of past bull markets.

As markets accept that “rate cuts won’t come as quickly or as much,” the following occurs:

• Willingness to add leverage declines.
• Existing leverage is gradually unwound.
• Institutions favor higher-yield, risk-controlled short-term bonds, pulling funds out of volatile assets like crypto.

Policy Expectations and Risk Premiums

When policy is no longer unconditionally friendly, markets demand higher risk premiums to compensate for potential volatility. This effectively reduces the valuation multiples investors are willing to pay, causing prices to seek a new equilibrium downward.

For crypto, this means that even if on-chain data and user metrics remain stable, prices may stay weak for a long time due to changes in discount rates and risk appetite—these “invisible” parameters.

6. The “Carving a Boat” Perspective: Major Cycles and Time Windows

Using the “carving a boat” analogy, the bottom is roughly reached about a year after the peak. We take September of this year as a rough cycle point, which aligns with Bitcoin’s past bull-bear rhythm.

Historical Cycle References

• 2017 Peak → 2018 Bottom: about 1 year, with a maximum decline of over 80%.
• 2021 Peak → 2022 Bottom: also about 1 year, completing the top-to-trough retracement, then entering a long sideways phase.

Both cycles show similar structures: after the top, 3–4 months of “conflicted decline + repeated rebounds,” with emotional collapse and bear market consensus usually forming within 6–12 months, reaching a relatively clear cycle bottom near one year.

This Cycle: From Peak to September 2026

Assuming the absolute top occurs at the end of 2025 or early 2026, then roughly 10–12 months later would be mid to late 2026, aligning with the “around September this year” window.

In this phase:

• Early bull market high positions are mostly out or deeply trapped.
• Market expectations for “next bull” are not yet clear; pessimism is near its peak.
• Long-term funds quietly accumulate, while short-term traders lose interest.

Limitations and Value of the “Carving a Boat” Method

Limitations: No simple time rule can precisely predict when or at what price the bear market bottom will occur. Unexpected policy black swans, macro crises, or major technological breakthroughs can occur.

Value: It provides a rough psychological timeframe for position management and mindset:

• Don’t expect an immediate reversal at the start of a big decline.
• Don’t panic out completely near a roughly one-year deep correction.

7. Price Structure: Potential Bottom Range of This Bear Market

Our core estimate: “The bottom of this bear market is around the 2017 bull market high,” roughly near 60,000. Historically, the previous bear market bottom was near the 2013 bull high (~3,000), which is slightly above the prior bull peak, indicating a pattern where bear bottoms tend to be above the previous bull high.

This suggests that in a long-term upward trend, each bear market bottom is above the previous bull high, reflecting Bitcoin’s increasing adoption and store-of-value logic.

Applying this to the current cycle:

• 2021 bull high near 69,000, with many analyses using around 60,000 as the “main peak” of that cycle.
• If the current bear bottom is roughly at the previous bull high (~60,000), it has strong historical support: many long-term holders and institutions have accumulation zones there, and on-chain activity and chips are concentrated.

Falling to this level could be viewed as a “long-term attractive entry point” for many.

Risks: Potential for Deeper Dips Below 60,000

Be aware that macro environments are more complex now: severe recession, liquidity crunches, or regulatory crackdowns could cause prices to briefly dip below 60,000, similar to the extreme panic lows in previous cycles.

But as long as Bitcoin’s network effect and mainstream adoption remain intact, the long-term multi-cycle trend tends to be “higher highs and higher lows.” The 60,000 vicinity can be seen as a highly attractive long-term zone in this cycle.

8. Possible Trajectory for the Next 6–12 Months

Combining all factors, a simplified path for the next 6–12 months (more macro-oriented than short-term trading signals):

Pre-Chinese New Year (1–2 months)

• Main factors: tight cash flow, year-end settlement, liquidity tightness.
• Market features: weak rebounds, minor dips with quick recoveries, overall “stepwise” downtrend, but slower than previous sharp drops.
• Strategy: focus on defense, reduce leverage, avoid bottom-fishing, wait for liquidity recovery signals.

Post-New Year to Mid-Year

• Marginal liquidity improvement: some funds return, short covering, arbitrage entries.
• Market shifts from “one-way decline” to “wide-range oscillation,” with 1–2 significant rebounds.
• Resistance levels and trapped positions may cause sharp pullbacks, making sustained rallies difficult.
• Crypto is mainly digesting negative sentiment and trapped positions; no new narrative or big capital inflows yet.

Mid-Year to September: “Deep Water” and Bottoming Phase

• If the cycle window holds, this period may see price testing the 60,000 zone or lower, with multiple quick drops and slow recoveries.
• On-chain long-term addresses increase, short-term holders are washed out.
• For long-term investors, this is an opportunity to accumulate gradually; for traders, it’s a tough environment.

9. Summary and Practical Advice

Based on our previous grid and position management (we operated a wide-range spot grid), we are already sensitive to the “downward trend and grid losses in trending markets.”

Calibrating Our Cycle Expectations

Treat “around September 2026” as a psychological timeframe, not an exact date:

• Before then, focus on defense and leverage control.
• Near this period, avoid panic selling; consider holding some core positions or thinking contrarily in extreme panic.

Handling Price Ranges

View around 60,000 as an “attractive but not guaranteed perfect entry zone.” If prices reach this level:

• Use staggered entries rather than all-in.
• Reserve mental space for more extreme scenarios, such as dips below 60, with some technical signals.

Operational Strategy Insights

When trend is confirmed to be bearish and macro liquidity is unfriendly:

• Shrink large grids and reduce leverage.
• Avoid long leverage in a long-term downtrend.
• If maintaining a grid, consider reactivating it at lower ranges and narrower volatility phases, treating it as a tool for sideways periods rather than the current bear phase.

Most importantly, always keep funds ready. When opportunities arise, prudent bottom-fishing is wise. Avoid overly optimistic altcoin dreams, as the next cycle’s altcoins may not be the ones you hold now. Focus on mainstream coins like BTC and ETH for the core holdings.