Yili Hua Calls for Margin Supplement in a Bull Market: Hope in Despair?

Recently, well-known domestic investor Yili Hua faced a margin call due to the decline in his crypto asset positions, with his liquidation price believed to be around $1,800 for Bitcoin. However, at this moment of significant pressure on his personal account, Yili Hua publicly declared through social media and other channels that the current market has entered the "best buying period." This seemingly contradictory behavior quickly became a hot topic of discussion in the market.

1. Yili Hua's "Danger Signals" and "Firm Calls"

1. Core Contradiction of the Event: A margin call typically indicates that the price of the assets held by the investor has fallen close to the liquidation line of their leveraged position, necessitating additional funds to avoid liquidation. This is a typical signal of investors getting trapped during a market downturn. Yili Hua's high-profile bullish stance at this time raises multiple interpretations of his motives.

2. Polarized Market Interpretations: One viewpoint suggests that this is a "cry for survival" from deeply trapped investors aiming to maintain market confidence and avoid panic selling affecting their positions, casting doubt on the credibility of his statements. Another perspective sees this as an extreme manifestation of "when others are fearful, I am greedy," where a seasoned investor, having experienced the full market cycle and understanding its brutality, dares to declare against the trend under extreme pressure, perhaps genuinely believing that the bottom is near.

3. Historical References: In both traditional financial markets and the history of the crypto market, there are numerous cases of well-known investors who, despite facing significant losses, continued to uphold their original judgments and called for buying. Their ultimate success or failure depends not only on the accuracy of their trend judgments but also on the duration of extreme market emotions.

Yili Hua's personal circumstances and statements act like a multifaceted prism, reflecting the extreme anxiety, divergence, and gamesmanship of current market participants. Broadening the perspective, the movements of other globally recognized market participants may help piece together a clearer picture of market sentiment.

2. SoftBank's Silence and Wall Street's Bull-Bear Debate

1. SoftBank: "Vision" Cools, Steps Under Review

● Once an important "booster" for the tech and crypto markets, SoftBank Group has significantly shifted to a cautious investment style following a global tech stock crash and record losses in its Vision Fund.

● SoftBank founder Masayoshi Son publicly stated that the company has entered "defensive mode," focusing more on cash flow and profitability.

● Although not explicitly targeting the crypto market, SoftBank's overall contraction indicates that one of the key sources of incremental funds and narrative momentum from the last bull market has temporarily receded. This collective shift among top venture capital firms is a hallmark signal of the market cooling from liquidity euphoria.

2. Tom Lee and Fundstrat: Stubborn Bullish Flag

● Tom Lee, a senior strategist on Wall Street and co-founder of Fundstrat Global Advisors, is one of the most famous bullish analysts in the cryptocurrency market in recent years.

● Despite the ongoing market slump, Lee and his team recently maintained that Bitcoin's "fair value" is far above the current price, citing fundamental factors such as record-high hash rates, increased accumulation by long-term holders, and the continuous improvement of institutional infrastructure.

● He emphasized that the market is undergoing a typical bear market bottoming process, and excessive pessimism could lead to missed opportunities. Lee's viewpoint represents a segment of Wall Street's commitment to the long-term value of crypto assets.

3. Bears' Warnings: Macroeconomic Headwinds and Trust Crisis

● On the other hand, some analysts from institutions like JPMorgan and Goldman Sachs continue to emphasize the harsh macro environment. Persistent high inflation and aggressive interest rate hikes and balance sheet reductions by major economies are systematically withdrawing risk appetite and liquidity from global markets.

● Additionally, the far-reaching trust crisis triggered by events such as the collapse of Terra/Luna, the bankruptcy of Three Arrows Capital, and the FTX debacle means that the crypto market's own recovery will take longer. Bears argue that it is too early to call a bottom until a clear macro turning point emerges and the "toxins" within the industry are thoroughly cleared.

● The divergence at the institutional level highlights that the current market is at a complex intersection of macro cycles, industry endogenous cycles, and technological faith cycles. The behavior of funds reveals more secrets than words.

3. On-Chain Data and Capital Flows: Clues Behind Cold Numbers

In addition to celebrity statements and institutional viewpoints, publicly available and transparent data on the blockchain provides another relatively objective dimension for observing sentiment and capital flows.

1. Long-Term Holder (HODLer) Behavior: On-chain data analysis firms like Glassnode report that despite significant price volatility, the overall supply of Bitcoin held by "long-term holders" (addresses holding tokens for over 155 days) has not seen a large-scale reduction recently, and even accumulated at certain price lows. This is often seen as a sign of "diamond hands" and is one of the reference indicators suggesting the market may be approaching a bottom.

2. Exchange Flow and Balances: The continuous outflow of Bitcoin from centralized exchanges may indicate that investors prefer to transfer assets to private wallets for long-term custody rather than preparing to sell at any moment. If the overall balance on exchanges continues to decline during a downturn, it may help alleviate concentrated selling pressure.

3. Stablecoin "Ammunition" Reserves: The total market value changes of major stablecoins (such as USDT and USDC) and their stock on exchanges can be viewed as an "ammunition depot" for off-market waiting funds. If the total market value of stablecoins stops shrinking or even starts to grow, while the balances of stablecoins on exchanges rise, it may signal the accumulation of potential buying power.

4. Futures Market Liquidation and Funding Rates: Extreme downturns are often accompanied by concentrated liquidations (forced closures) of high-leverage long positions in the futures market. When large-scale liquidations occur, the passive selling pressure on the market will sharply decrease in the short term. At the same time, if perpetual contract funding rates remain at negative or near-zero levels for an extended period, it indicates that the speculative bullish frenzy in the market has largely cleared.

These on-chain signals are not absolute bottom timers, but taken together, they paint a picture of "panic selling has occurred, some steadfast investors are beginning to step in, but overall sentiment remains at a freezing point." This resonates with the state described by Yili Hua and others as "extremely cheap but no one dares to buy."

4. Emotional Extremes: A Necessary but Not Sufficient Condition for Market Bottoms

There is an old saying in financial markets: "Markets are born in despair." Yili Hua's margin call yet bullish stance, and Tom Lee's insistence on being bullish amid market declines, are behaviors that, along with the pervasive pessimism, mockery, and skepticism on social media, vividly illustrate the extreme polarization of market sentiment.

1. Significance of Sentiment Indicators: Market sentiment indicators like the Fear and Greed Index, when they remain in the "extreme fear" zone for an extended period, often indicate that the market has priced in most negative news. At this point, any marginal improvement could trigger a significant rebound. Current market sentiment undoubtedly fits this characteristic.

2. Complexity of "Contrarian" Signals: However, a bottom in sentiment does not equate to an immediate and permanent price reversal. The market can remain in extreme pessimism for a considerable time, even experiencing a more severe "longs liquidating longs" final drop. The repair of sentiment requires catalysts, such as clear turning points in inflation data, a slowdown in interest rate hike expectations, new positive narratives emerging in the crypto industry, or clearer regulatory frameworks.

3. Traps and True Meaning of "Best Buying Opportunity": For leveraged traders, any "bottom fishing" behavior during extreme market volatility and unclear trends may lead to forced exits due to short-term fluctuations, as exemplified by Yili Hua's own situation. The so-called "best buying opportunity" holds vastly different meanings for investors with different capital natures, investment horizons, and risk tolerances. For long-term investors with regular investments, the current range is undoubtedly attractive; for short-term traders, it may still be a risky territory.

Historical experience shows that true bottom regions are often built in silence, or even amidst mockery. The current pervasive sense of despair in the market, along with sporadic "contrarian" calls, may be the faint glimmer of light at the end of a dark tunnel—but to traverse the tunnel, patience, caution, and a profound belief in value are still required. The market will never simply repeat history, but the rhythms of human nature and cycles are always similar.

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