The Chinese equity market just showed us how quickly sentiment can flip. China's CSI 300 index wiped out a solid 1.2% gain in a single session right after authorities moved to raise margin requirements. It's a textbook case of how policy tightening crushes bullish momentum overnight.

What's interesting here isn't just the number—it's what it signals. Margin hikes typically mean regulators are getting nervous about leverage-fueled rallies. They're basically saying: cool it down before this gets messy. When that kind of policy hits, retail traders panic, leveraged positions unwind, and suddenly your green day becomes a red one.

For crypto traders watching traditional markets, this is a real-world reminder. Policy doesn't care about your technical analysis. It doesn't respect your support levels. One announcement, and years of accumulated gains can evaporate. The playbook is always the same: tighter rules → forced selling → cascading losses.

This is why diversification and risk management matter. Whether you're trading stocks or crypto, you're playing in the same arena where policy makers have all the weapons.