Bitcoin's flash crash caused 310,000 liquidations. Is the market no longer focused on fundamentals?

Source: Talking about Li and Talking about the Outside

Yesterday (February 24) I still chose to go outdoors for hiking, without paying attention to market prices. In fact, my own account has also experienced significant fluctuations recently. I just took a rough look, and compared to the highest point of Bitcoin, if calculated in USD, the paper profit has retraced about 17% over the past month. However, for me, this is just a change in numbers. I have also experienced a retracement of over 70% in asset profits at the highest USD point, and that’s not a big deal as long as the coins in my hands haven’t decreased.

If someone likes to monitor prices every day, the market will always give you some surprises or shocks from time to time. This morning, I saw friends discussing the market and found that it had crashed again. The price of Bitcoin dropped from around $96,000 to around $91,000, and the daily RSI also reached around 36. Compared to Bitcoin, the daily drop of altcoins was even larger, which can still be described as a bloodbath, with many coins dropping over 10%, as shown in the figure below.

This drop has also triggered some chain reactions. As of the time of writing this article, in just the past 12 hours, over 310,000 people have been liquidated, and about $960 million in funds have directly vanished (into the wallets of a few people). The market's panic sentiment seems to be spreading. As shown in the figure below.

According to liquidation data, this price crash has also nearly cleaned out the long positions around $92,000. Currently, there are still about $900 million in long positions around $89,000, and it cannot be ruled out that the market may continue to explore lower levels. As shown in the figure below.

As for the reasons behind this price crash, many analysts and KOLs have summarized various opinions online. Some say it’s due to the Federal Reserve's policies and the strengthening of the dollar, some say it’s because of ETF fund outflows, some say it’s due to Trump’s tariff policies, and others say it’s because OKX is suspected of violating U.S. anti-money laundering laws… Interested friends can search and learn about these themselves. Anyway, whether the market is falling or rising, we can always see various reasonable and evidence-based reasons and analyses afterward.

It seems that compared to strictly managing their positions, many people prefer to find reasons for the rise or fall. But do we really need to find so many reasons afterward?

Recently, through some messages in the backend, I’ve observed that many people seem to have become somewhat jittery. For example, when Bitcoin rises a bit, they see $150,000 and come to ask me if they can still buy, wondering if a bull market is coming again? When Bitcoin drops a bit, they see $70,000 and come to ask me if they should sell, wondering if a bear market is starting?…

Opinions float back and forth, and I rarely respond to such messages now. Although I have repeatedly expressed my views in my articles (regardless of whether my views are right or wrong, I tend to be relatively optimistic), I still can’t stop some people from leaving repetitive and meaningless questions, such as asking: Do you think the crypto market still has hope? Do you think I should exit the crypto space and invest in Hong Kong stocks? And so on… I receive at least a dozen similar messages every day.

Perhaps these people are not really asking questions because they don’t seem to have thought about what exactly they want to ask or what specific issues they want me to solve. Raising such vague questions is probably just a way to seek some psychological comfort. But the problem is, I’m not a psychological counselor. However, this does seem to be a good direction; I just personally am not interested. If there are certified psychological counselors interested, they might consider offering related services or businesses to the crypto market, which could have good development potential.

Many times, some partners think about accepting a 10-fold return before making a trade, but very few consider what they would do if they experienced a drop of over 50%. This is also one of the main reasons why most people cannot make money.

In fact, when facing market volatility, as long as we strictly manage our positions according to our risk preferences and consistently adhere to our trading discipline, the level of market fluctuations like today can basically be ignored. When I was working at the company, the big boss often reminded us during meetings: "Bodhisattvas fear causes, while sentient beings fear results." I think this saying is great, and I have been contemplating and understanding it over the years, and I share it with everyone here.

Next, let’s continue to explore a question: Has the crypto market stopped paying attention to fundamentals?

This bull market has indeed been quite difficult for many people to make money. The days when you could blindly buy exchange tokens during a bull market and expect to see several times returns are long gone. So far, this bull market seems to belong only to certain institutions, a few people, and Bitcoin.

In fact, during the bear market from 2022 to 2023, including ourselves, we still maintained the habit of researching project fundamentals. For example, we tend to focus on projects that can secure funding and those with good product experiences… But as reviewed in last week’s article (February 21): many projects we initially thought had good fundamentals have seen their prices plummet. A so-called good project does not guarantee a good price, and a so-called garbage or air project does not mean it cannot skyrocket.

During this cycle, the number of new projects in the market has increased exponentially (according to Dextools data, the number of tradable tokens on-chain DEX has exceeded 14.84 million), and the element of "gambling" has become increasingly prominent. Gradually, we will find that the current market seems to no longer focus on fundamentals but has completely transformed into a logic of attention economy.

Wherever people’s attention shifts, that place will be hyped and prices will rise, even if it’s all just air. For example, the rise of AI concept tokens in this cycle seems not to be due to the practical value created by projects like NEAR, TAO, or RENDER, but more because of the attention driven by the global explosion of ChatGPT.

In fact, a similar situation existed in the last bull market, such as when Facebook rebranded to Meta, which shifted people’s attention more towards the concept of the metaverse, boosting the prices of many metaverse-related tokens. However, compared to the last cycle, the attention in this cycle seems harder to grasp in advance, as the continuous wealth creation effect of MemeCoins (accompanied by more zeroing effects that we do not see reported in the news) seems to disrupt existing experience rules and hype rhythms. Many people no longer care about the technical innovations and product experiences of projects; the only concern is whether there are quick speculative opportunities to make money.

Thus, the market has turned into a very interesting pattern: a certain trend attracts the attention of the mainstream crowd / or the mainstream crowd creates a certain demand → liquidity rapidly flows in and speculation occurs → related tokens’ prices soar → mainstream personnel / insiders / smart money begin to exit → retail investors’ attention starts to focus and take over → the trend begins to reverse and most retail investors get trapped. Then, a new cycle of attention is created, repeating this process.

After this cycle repeats many times, people will naturally feel fatigued, and most people (mainly retail investors) will naturally lose more and more money. PvP will become increasingly severe, and the frequency of trend changes will accelerate, especially with MemeCoins, where the lifecycle of an attention narrative from birth to collapse may only be a few hours.

The final result is what we mentioned in previous articles: this market seems to have been played to death. No one cares about project research anymore, no one cares about project white papers and roadmaps; everyone is only concerned about what the next attention narrative might be and whether they can rush in and out in time.

However, this may also be a necessary path for the development of things. As prosperity and bubbles eventually pass, most altcoins and MemeCoins in this market can only go to zero. The market will eventually return to fundamental economics. When most people are in despair (this market stage still doesn’t seem desperate enough), we might as well refocus on those projects with good fundamentals that can generate sustainable returns and have development visions, in order to make better long-term plans.

Don’t always stare at the screen looking at prices; it’s better to do something more meaningful than just watching the screen. If you are not a professional trader, you can try to reduce your trading frequency and extend your investment horizon, such as using quarters or years as investment units. Perhaps you will find it easier than now. As ordinary investors, we should not always think about making quick money unless you have clearly thought about what special abilities you possess to make quick money in this high-risk game, meaning what gives you the ability to lead and earn money from the other 99% of people.

If you are always thinking about getting rich overnight or making big money in a few months with a small investment, but you do not have the investment ability, special background, or special channels for short-term wealth, then even if you change to a new environment or opportunity, you will likely continue to live a tiring life without results.

At this stage, I have observed that the emotions of the partners are mainly divided into several types: one is fully invested and trapped, continuing to look bearish and disappointed with the market; one is looking bearish in the short term and preparing to continue bottom-fishing; and one is holding cash, feeling at a loss regarding both rises and falls. In terms of my personal advice, this still needs to be decided based on your own risk preferences and position situation:

If you are currently fully invested and trapped, don’t always think about withdrawing just to break even; face failure positively and re-plan your position goals. If you have profits, strictly execute your trading discipline according to established goals and take partial profits; don’t be greedy.

If you are currently holding cash and can bear certain risks, then when encountering market conditions like today, you might consider building positions and buying Bitcoin in batches.

If you are currently half-invested and have a relatively low risk preference, then just continue to patiently wait for new opportunities.

In summary, you need to optimize your portfolio according to your own positions and risk preferences. There is no fixed template for making money; everyone should be different. The wallet is yours. Since you choose to enter this field to play some high-risk games, you must have the basic awareness of being responsible for your own profits and losses and being willing to accept the outcomes. It’s best to use funds that do not affect your real life. Ordinary people should not leverage or trade contracts at all times after entering.

In the past two days, I casually looked at some other people's opinions, and I found that some analysts seem to be bearish down to $70,000. As for whether $70,000 can be reached, I don’t know and cannot predict, but if you are bearish, then let’s see if it can break below the $89,000 level first.

I remember on January 13 of this year, that night kept many people awake. Bitcoin dropped to around $89,000, breaking through many people's short-term psychological levels. In the article at that time, we repeatedly expressed a viewpoint: try to form and establish your own trading system, don’t always be influenced by news and emotions, and trading needs to consider cycles. If your goal is the next 10 or 20 years, then Bitcoin now is not expensive no matter when you buy it.

On February 24, 2025, Strategy said: We bought 20,356 Bitcoins at a price of $97,514 each, achieving a 6.9% BTC return since the beginning of 2025.

A BTC OG who was trapped at the peak during the 2017 bull market said: Thanks to MicroStrategy for buying our long-held Bitcoin at a unit price of $97,514, allowing us to achieve a 400% BTC return and live a better life in 2025.