Since the entry of large institutions, Bitcoin's identity has become blurred—it is no longer purely a safe-haven asset, nor entirely a risk asset, but rather a liquidity tool caught in the middle. This position is often called flexible, but frankly, it lacks clear definition. To see a true significant rally, ultimately, sufficient liquidity is still needed. Honestly, I find it hard to agree with the notion of a four-year bull market.

Some blame a major exchange, thinking that its large size should entail more responsibility, but that’s just surface-level. The real underlying reasons lie in two dimensions: the evolution of institutional quantitative trading and the shift in macro policy environment.

A comparison chart of net liquidity and BTC price makes this clear. The start of the 2021 bull market was fundamentally driven by the global super-stimulus triggered by the pandemic—an unprecedented opportunity that caused net liquidity and BTC prices to rise in tandem. But the turning point came on October 10, after which liquidity began to contract, and prices came under pressure.

What exactly happened on that day? Looking at the US Treasury TGA balance and the Federal Reserve Reserve Balances (RRR) data makes it clear. After October 10, the TGA balance suddenly surged. The reason is simple—America’s new fiscal year begins in October, which is the traditional peak period for bond issuance. Usually, the newly issued short-term bonds are purchased with reserves from the RRR, but at that time, the RRR was already at its bottom. What to do when there’s no money? Withdraw from the market. From October 10 to October 30, the Fed forcibly drained $200 billion from the market. This rapid contraction of liquidity directly triggered a plunge in asset prices, with liquidity assets hit hardest. The market also had warning signals at the time, but most people didn’t pay attention.

Those who carefully examined the data would find that this collapse actually started from the early morning.