On May 23, 2025, after briefly reaching a historic high of $110,800, the price of Bitcoin suddenly plummeted below $107,500, with over 120,000 liquidations across the network within 24 hours, amounting to $452 million. This period, known as the 'Bull-Bear Meat Grinder', not only left retail investors in despair but also sparked deep questions about the sustainability of the bull market—was it merely a technical correction or a signal of a cyclical turning point?

The Triple 'Culprits' Behind the Plunge

1. Liquidity Trap and Institutional Game

  • 'False Breakout' Hunting Strategy: On May 18, Bitcoin experienced a 'frightening jump', with the price plummeting 4% from $107,000 to $102,000, simultaneously squeezing both short leverage and bullish chasing sentiment through 'liquidity plunder', resulting in $152 million liquidated in just one hour that night. This drop below $107,500 is seen as a replay of the previous script.

  • Institutional Selling Pressure Emerges: On-chain data shows large sell orders worth $41 billion near $102,000, with some institutions choosing to take profits at historical highs. Miners have net sold 8,000 BTC in the last 30 days, increasing the cost line selling pressure risk.

2. Macroeconomic Policy 'Black Swan'

  • Federal Reserve Rate Cut Expectations Cool: Although the core CPI year-on-year rate has dropped to 2.8%, the probability of a rate cut in June is only 12%, and whether it can be initiated in September remains uncertain. The 10-year US Treasury yield has exceeded 4.5%, Moody's has downgraded the US credit rating, and market concerns about stagflation are intensifying.

  • Regulatory Storm Brewing: South Korea tightens token listing rules, Pakistan establishes a digital asset management bureau to strengthen regulation, and the European Central Bank's digital currency (CBDC) promotion plan are all putting pressure on market sentiment.

3. Technical Overbought Warning

  • RSI Indicator Warning: Bitcoin's Relative Strength Index (RSI) has broken through the 70 overbought zone, and the MVRV ratio has risen to 3.2, close to the peak of the 2021 bull market, with significant short-term pullback pressure.

  • Key Support Level Breached: Although there are 2.45 million BTC accumulated in the range of $102,000 to $99,000 forming a 'diamond bottom', after breaking below $107,500, the market's psychological defense line has shifted to $95,000.

Future Outlook: Three key variables determine life and death.

  1. Policy Game: The June Federal Reserve dot plot and whether the July tariff policy will be intensified will determine the liquidity easing expectations.

  2. Technical Defense: If the support at $98,000 is maintained, hitting $120,000 is still possible; otherwise, it may dive to $80,000.

  3. Geopolitical Finance: The demand for 'de-dollarization' in emerging markets (like Turkey and Nigeria accelerating the adoption of USDT) may become a new engine, but the $120 billion maturity mismatch risk of Tether hides a crisis.

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