Don't try to find enemies in the system; instead, strive to find patterns within the system.

01 Plunge: Bitcoin's "Black Friday"

For Bitcoin, last Friday was a true "Black Friday."

On November 21, Bitcoin fell below the $82,000 mark and at one point approached the $80,000 threshold. Compared to the historical high of $126,000 set on October 6, it dropped a full 35%. In the span of 24 hours, the total amount of liquidations across the network exceeded an astonishing $1 billion. Hundreds of thousands of traders lost everything in this plunge.

Oh my. $1 billion.

Although fluctuations are normal for Bitcoin, why did this one come so fiercely and suddenly?

Let me help you sort it out.

This starts with the direct cause of the plunge:

Professional institutions massively sold off their Bitcoin ETFs.

02 Bitcoin ETF: A "Pork Ticket" for Bitcoin

What is a "Bitcoin ETF"?

You want to invest in pork because you believe the price will rise.

In the past, you had to raise pigs yourself, which was time-consuming, labor-intensive, and risky. But now, a trust company has emerged. It buys 1 million pigs and places them in a professional pigpen. Then, it divides the ownership of these 1 million pigs into 100 million "pork tickets" and lists these tickets for trading on the stock exchange. So, you just need to open a stock account to buy "pork tickets" like you would trade stocks. Or you can call it "Pork ETF."

That's right, this "pork ticket" is the ETF. Its full name is Exchange-Traded Fund.

The so-called Bitcoin ETF is the "Bitcoin ticket." It allows you to enjoy the profits and losses associated with Bitcoin's price movements without holding actual Bitcoin.

In January 2024, it was finally officially approved by U.S. regulators. Why was it approved? There are many reasons. But the direct reason for the approval was that regulators lost a key lawsuit against a crypto company. At the same time, Wall Street financial giant BlackRock also took the lead in applying for it. Ultimately, regulators had to open the floodgates.

From then on, not only gold and oil had ETFs, but Bitcoin also had its ETF.

However, while ETFs do not change the nature of Bitcoin, they completely change the way money flows in and out.

On one hand, it is a "super on-ramp." A large amount of capital can flow in easily. On the other hand, it is also a "super off-ramp." This capital can exit the market at unprecedented speed.

So, why did professional institutions massively sell off Bitcoin ETFs and exit the market so quickly?

Because they heard a series of "hawkish statements" from the Federal Reserve.

03 Hawkish Statements: Forget About Rate Cuts

What are hawkish statements?

Let me give you a recent example.

On November 20, 2025, the day before the plunge, Federal Reserve Chairman Jerome Powell made a speech. Let's take a look at his exact words.

"While we acknowledge that we have made some progress, the inflation rate remains stubbornly above our 2% target. To declare victory now or to start speculating about the timing of rate cuts is extremely premature. We are fully prepared to maintain a tight policy stance—meaning keeping interest rates 'higher for longer'—until we are confident that the task of combating inflation is truly complete."

This statement contains a lot of key information. For example, inflation remains stubborn; speculating about rate cuts now is extremely premature; and keeping interest rates "higher for longer."

Translated, it means, "Stop dreaming; the situation is more serious than you think"; "Your previous expectations of a rate cut in December are completely wrong and wishful thinking. I officially deny it"; "A high-interest-rate environment will become the new normal in the future, not temporary. The party is over."

But if we were to summarize it into a core conclusion, it would be one sentence.

"I can tell you right now, we are not cutting rates."

But how does not cutting rates relate to institutional selling?

Because Powell's statement essentially tells the market that the "new debt" from U.S. Treasury bonds will have higher interest rates.

04 New Debt Rates: The "Official Guiding Price" of Money

Why? Why does "not cutting rates" lead to higher new debt rates?

You can think of the financial market as a "supermarket of money."

The Federal Reserve is the general manager of this supermarket. It has a special counter called the official risk-free investment counter. Not cutting rates is equivalent to the general manager shouting through a loudspeaker, "My official counter will continue to offer an annualized interest rate of 5.5%. And it's zero risk."

This 5.5% is the "official guiding price" for the entire money supermarket.

Now, the U.S. government, as the vendor, needs to issue a batch of new IOUs, which are new Treasury bonds, to borrow money from customers. Can it offer a 3% interest rate? No. Because customers would think, "Am I crazy? Why wouldn't I just deposit my money at the general manager's counter for an annualized 5.5%?"

That's right, the effect of the official guiding price is that any bond priced higher (with a lower interest rate) cannot be sold.

Therefore, to actually borrow money, the new debt issued by the U.S. government must align its interest rates with the Federal Reserve's official rate. It may even need to be higher, say 6%.

This is the causal relationship between "not cutting rates" and "new debt rates being high."

However, this new debt is a future event. It hasn't been issued yet. So why are institutions starting to sell off now?

Because everyone knows that as soon as this "expectation" appears, asset prices will start to plummet.

05 Expectations: The Market Adapts "Prices" to "Yields"

Why is that?

Because no one is a fool. When higher-yielding assets are about to appear and interest rates cannot change, lower-yielding assets will adjust their prices downward to increase their yields.

For example, if you spend $2 million to buy a house with an annual rent of $100,000, your rental yield is 5%. If the rent cannot change, and the price drops by half to $1 million, the rental yield will immediately double to 10%, and someone might be willing to buy it.

Similarly, when there is an expectation of new debt with a 6% interest rate, many people will sell off their old debt with only a 3% interest rate. The old debt will be massively sold off, causing its price to drop.

How far will it drop? The details are very complex. But generally speaking, the price of old debt will continue to fall until its yield rises to be roughly in line with the expected yield of the new debt, and the market finds a new balance.

So, selling off now is necessary because the prices are still good.

Moreover, it's not just about selling old debt; high-beta assets like Bitcoin must be sold off quickly.

06 High-Beta Assets: "Volatile" Assets Everyone Wants to Dump

What are "high-beta assets"?

You can think of Beta as a measure of how "volatile" an asset is.

If you consider the entire market's Beta value to be 1, it's like a regular family sedan. Those assets with particularly high Beta values are like F1 race cars. On sunny days (Risk-On), many people like to drive race cars because they have the potential for excess returns. But on rainy days (Risk-Off), many people switch to a defensive mode, selling off the uncontrollable race cars for safer family sedans.

Bitcoin is a typical high-beta asset. Therefore, it is prioritized for selling. In fact, there was a significant sell-off. Data shows that in the weeks leading up to November 21, the U.S. spot Bitcoin ETF experienced five consecutive weeks of net outflows, totaling $2.6 billion.

Alright. So it was for risk aversion that institutions sold off these assets. But why did it trigger a collapse that caused hundreds of thousands to be liquidated?

Because the actions of institutions triggered a panic sell-off.

07 Panic Sell-Off: Rolling Stones, Crowds Fleeing, Chain Explosions

What is a "panic sell-off"?

It starts with a rolling stone.

As the main force, institutional selling, even if rational, is equivalent to pushing a boulder off a mountain. The balance of buying and selling in the market is disrupted. Prices begin to experience the first wave of decline.

Next, the crowd flees.

Thousands of retail investors, seeing the rolling stone, are easily driven by fear to start selling off as well. Because if even the big institutions are running, it’s too late if they don’t. Thus, the scope of selling expands, and prices accelerate downward.

Finally, chain explosions occur.

The accelerated price decline triggers "forced liquidations" in leveraged trading. This is liquidation. After that, it spirals downward. Prices drop, triggering more liquidations. Liquidations further drive down prices. Lower prices trigger even more liquidations…

In the world of investing, fear runs faster than greed. And computer programs run faster than fear.

So, why did Bitcoin plummet?

Because the Federal Reserve's hawkish statements made new debt highly attractive. To hedge against risk, institutions prioritized selling off high-risk Bitcoin while simultaneously selling old debt. The large-scale sell-off of Bitcoin ultimately triggered market panic and a collapse.

Yes. Essentially, this is about taking advantage of the U.S. government's resources.

08 Taking Advantage of the U.S. Government: Capital Has No Faith, Only Flow

What does it mean to "take advantage of the U.S. government"?

Let me tell you an interesting story.

To regulate the city's traffic order (combat inflation), the police chief (the Federal Reserve) ordered that the central bank (the U.S. government) must keep its vault open 24 hours a day. Anyone who wants to take money can go in directly.

The bank president was very unhappy but had no choice but to comply.

Meanwhile, Xiao Wang, who was originally driving a modified race car (Bitcoin) and preparing for an adventure, heard that the vault was open. He immediately sold the race car and ran to the risk-free bank, encouraged by the police chief, to take that guaranteed money.

This is "taking advantage."

Specifically, it means selling off high-risk assets like Bitcoin and using the proceeds to purchase risk-free Treasury bonds with relatively high interest rates, which the U.S. government (ultimately taxpayers) is forced to pay.

Capital has no faith, only flow.

And the collapse of Bitcoin once again proves this point.

But this is absurd. Why would the Federal Reserve go against the U.S. government?

Because they each have their own duties.

09 Accelerator and Brake: Ensuring the Old Car Doesn't Fall Apart

The U.S. government and the Federal Reserve are like the "accelerator" and "brake" of a car.

The U.S. government (the Treasury) is the accelerator. Its task is to spend money, borrow money, and stimulate the economy. So it prefers lower interest rates for borrowing.

The Federal Reserve is the brake. Its task is to maintain price stability (control inflation) and achieve maximum employment. To prevent the car from speeding and overheating the engine (inflation), it sometimes has to step on the brake (raise interest rates or maintain high rates). Although this often makes those pressing the accelerator feel very uncomfortable.

This institutional design, which takes the brake away from politicians, is called "central bank independence." The goal is to prevent a larger disaster, namely hyperinflation. Because historically, there have been countless governments that, after gaining control of the printing press, printed money recklessly, ultimately leading to economic collapse.

So, it seems they are working against each other. But their ultimate goal is the same: to ensure that this 200-year-old old car of America does not fall apart.

10 Complex Systems: Never Personify the System

Alright. Back to Bitcoin.

So, will Bitcoin continue to fall, or will it rise again?

It's hard to say.

But so far, perhaps what we should learn from this is "not to personify the system."

Some say this collapse is a conspiracy by certain manipulators, that some bad people are doing evil.

I don't know if that's true. But I want to believe that this is the result of countless individuals within the system, such as the Federal Reserve, the U.S. government, institutions, and retail investors, making choices they believe are beneficial under their respective rules and motivations. And these choices converged to create the situation we see today.

So, don't try to find enemies in the system; instead, strive to find patterns within the system.

Only then can you have a clearer understanding than others.

Even see the direction of the tide.

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