Introduction 🚨

Recently, the Bitcoin market has experienced significant volatility. Influenced by multiple factors such as the controversy over U.S. government funding, policy uncertainty, and global liquidity tightening, the BTC price plummeted sharply within just a few hours, leading to forced liquidations of long positions and extremely fragile market sentiment. This article will review the events of this market wave, outline a timeline, analyze the reasons, provide technical analysis, and offer a market outlook to help everyone grasp the core pulse of the market.

Event Review 😱

Against the backdrop of a continuing political storm in the U.S., investor confidence has been severely impacted. The Speaker of the House had previously stated that they would advance funding legislation to end the government shutdown, but the uncertainty surrounding policy disputes and government funding arrangements caused market sentiment to plummet. At market open, the BTC price hovered around $78,000, but as discussions about policy and shutdown risks escalated, long positions faced liquidation, and leveraged funds were forced to close, causing the price to drop sharply. According to trading data, Bitcoin's price fell from around $78,000 to approximately $72,900 in just a few hours, with frequent occurrences of liquidations and large-scale fund withdrawals, leading to a situation that was momentarily out of control.

Timeline ⏰

• 23:32: The Speaker of the House announced the advancement of funding legislation to end the government shutdown, igniting policy uncertainty.
• 00:00: Market opens, BTC price around $78,100, investor sentiment dampened by internal and external uncertainties.
• 00:00-03:00: Bitcoin price plummeted from $78,094 to $72,889, a cumulative drop of about 6.67%, triggering forced liquidations of long positions.
• 01:51: Within 111 minutes, BTC price rapidly dropped to $74,845, showing a severe reaction of liquidations and fund withdrawals.
• 02:12: BTC broke below the key support level of $74,000, raising concerns about further adjustments in the market.
• 03:12: The House ultimately passed the funding bill, partially alleviating the risk of a shutdown, but the previous sharp sell-off had already led to low-level market fluctuations.
• 03:30: BTC price slightly rebounded to about $74,799; although there were signs of a rebound, overall confidence remained low.

Reason Analysis 🔍

The market's severe volatility was primarily driven by two major factors:

1. Political and Policy Uncertainty
   Ongoing disputes in the U.S. government regarding the funding bill and partial shutdown have intensified market panic. Repeated statements about government funding arrangements, trade tariffs, and interest rate cuts have made investors worry about the macroeconomic outlook, triggering rapid fund withdrawals and exacerbating the downward pressure on Bitcoin and other assets.

2. Global Liquidity Tightening and Fund Withdrawals
   Influenced by global macroeconomic factors such as a weak U.S. dollar, rising inflation pressures, and a sharp decline in U.S. stocks, overall market liquidity has tightened. In this environment, high-leverage positions in the crypto market were generally impacted by liquidation shocks, with large whale funds frequently closing positions and limit buy orders leading to liquidity exhaustion, causing prices to plummet.

Technical Analysis 📈

Based on the 45-minute candlestick data of Binance USDT perpetual contracts, we can see:

• Bollinger Bands and Moving Averages
  BTC price is running along the lower Bollinger Band, indicating that the market is in an extreme oversold state. The current price remains below multiple moving averages (MA5, MA10, MA20, MA50), all of which are in a bearish arrangement, indicating a clear downward trend in the short, medium, and long term.
• EMA Indicator Observation
  EMA5, EMA10, EMA20, EMA50, and EMA120 are all at low levels, showing a strong bearish trend overall. The slope of EMA20 has reached -1.36%, while EMA24 and EMA52 are also in a downward state (with slopes of -1.19% and -0.64%, respectively), further confirming the strength of the downward momentum.
• Volume-Price Relationship and Liquidation Data
  Trading volume shows that the 10-day average volume has increased by 108.45%, and the 20-day average volume has also risen by 63.51%, indicating enhanced trading activity in the short and medium term. However, net outflows of approximately $200 million occurred in the main funds within the last hour, with total liquidations around $10 million and long positions accounting for as much as 70%, indicating that the market is continuously triggering liquidation signals amid extreme panic.
• Bearish Price Reversal Signals
  The TD indicator shows signs of a bearish price reversal, which is an early signal of a trend change, suggesting that the market may enter a deeper adjustment phase.

Market Outlook 🔮

Although the U.S. House of Representatives ultimately passed the funding bill, partially alleviating the risk of a government shutdown, the previous sharp sell-off and fund withdrawals have left a deep imprint on the market. In the short term:

• The market may oscillate in a low range, and the lack of liquidity will continue to exacerbate subsequent adjustment risks;
• If the macroeconomic outlook for the U.S. and the world does not improve significantly, crypto assets may continue to face pressure, and if key support levels are broken, it could trigger more liquidations of leveraged positions;
• For long-term investors, this extreme volatility may provide an opportunity to accumulate at lower levels, but caution is needed regarding the risks of short-term market reversals and significant fluctuations.

Overall, the current market is in a structural adjustment period, with the dual pressures of liquidity scarcity and policy uncertainty making it difficult for BTC prices to escape bearish sentiment. Investors should remain cautious, reasonably allocate positions based on their risk tolerance, and pay attention to subsequent signals of macro policy and liquidity improvement, in order to seize potential rebound opportunities once the market stabilizes.

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