1. Moment of Shock: The Plummet of Digital Assets
On September 22, in the afternoon, the alarm in the cryptocurrency market suddenly rang. Bitcoin plummeted from $115,000 to $112,000 within an hour, with a daily drop of 2.65%; Ethereum's decline was even more severe, once crashing 9% below the $4,100 mark, ultimately closing down 6.34%. This crash spread throughout the market like a domino effect: Solana and Cardano fell over 8%, Dogecoin plummeted 10%, mainstream cryptocurrencies like XRP and Stellar also saw declines of over 5%, with almost no assets escaping the disaster.
The panic in the market reached its peak in the futures trading market. Coinglass data shows that the total amount of liquidations across the network within 24 hours reached 1.7 billion USD, with 407,100 investors instantaneously 'going to zero,' of which 97% were liquidated long positions. A liquidation order for a Bitcoin contract worth 12.74 million USD on the OKX trading platform became the most striking footnote in this 'slaughter.' From ordinary retail investors to institutional investors, everyone was caught in this liquidity vortex—micro strategies and Coinbase, among others, saw their cryptocurrency stocks drop sharply, with declines of 2.8% and over 3%, respectively.
2. Tracing the crash: The resonance of policy signals and market bubbles
1. The 'cooling agent' of macro policies
The direct trigger for this crash was the signal from the Federal Reserve regarding tightening monetary policy. On September 18, the Federal Reserve announced a 25 basis point rate cut, but Chairman Powell clearly stated that 'there is no need for a rapid adjustment of interest rates.' The proposal for a substantial rate cut of 50 basis points did not receive support, and future policy direction will be determined by 'evaluating at each meeting.' This statement completely shattered the market's illusions of easing policies, with the cryptocurrency market, originally reliant on liquidity support, being the hardest hit.
Jeff Mei, the COO of BTSE, pointed out that the Federal Reserve's cautious attitude has left traders in a wait-and-see mode. 'In an uncertain macro environment, funds are beginning to withdraw from high-risk assets.' Adding to the woes, the risk of a U.S. government 'shutdown' has risen, further exacerbating market concerns about the economic outlook. Under this dual pressure, cryptocurrencies, as typical risk assets, are facing a wave of sell-offs.
2. The 'double-edged sword' of high-leverage trading
The scale of liquidations is astonishingly large, rooted in the widespread high-leverage operations in the market. Cryptocurrency trading platforms usually offer leverage of 5-10 times, with some platforms even reaching 100 times, which allows investors to multiply their gains when prices rise, but also amplifies risks when prices fall. Data shows that of the 1.7 billion USD in liquidations this time, 1.614 billion USD came from long positions, indicating that most investors still hold illusions about the bull market and blindly chase leverage.
This speculative frenzy is not an isolated incident. In recent years, the myth of Bitcoin soaring from less than 1 USD to 58,000 USD has led many to overlook the risks. As analysts have pointed out, cryptocurrencies lack a recognized valuation system, and their price fluctuations entirely depend on market sentiment and the influx of funds, essentially being 'a speculative game dressed in a technological cloak.' When policy signals shift, the bubble lacking value support bursts instantly.
3. The 'domino effect' of institutional withdrawal
The quiet withdrawal of institutional funds has become the last straw that broke the market. According to industry predictions, signs of 'chips being distributed to retail investors' have appeared in the cryptocurrency market by the fourth quarter of 2025, with the holdings of institutions like Grayscale dropping from 28% to below 20%. After Bitcoin reached a historic high of 123,500 USD last week, the actions of institutions to take profits became increasingly evident, further intensifying the selling pressure.
This withdrawal is not accidental. With tightening regulation in various countries, the compliance risks of cryptocurrencies are becoming increasingly prominent. The stagnation of state-level Bitcoin investment legislation in the U.S. and the strengthening of global anti-money laundering regulations have led institutional investors to reassess risks. When the market loses the support of major funds, a rising trend sustained only by retail sentiment is difficult to maintain.
3. Aftershocks in the market: Wealth evaporation and chain reactions
This crash has caused the evaporation of wealth on a trillion-dollar level. The experience of Zhao Changpeng, the founder of Binance and once the richest Chinese, is a microcosm; his wealth shrank from 96 billion USD to 11.6 billion USD, with 90% of his assets evaporating overnight. Corporate investors also suffered heavy losses: Tesla lost about 200 million USD from holding Bitcoin, while Meitu Inc. lost over 19 million USD in a single day, and these cases illustrate the 'wealth-consuming effect' of cryptocurrencies on traditional enterprises.
It is worth noting that this crash has not significantly transmitted to the A-shares market. When U.S. stocks and cryptocurrencies crashed in May, the A-shares had already digested the risks ahead of time and exhibited independent performance. In the September crash, the domestic stock market remained stable, showing that investors' perception of cryptocurrency risks is gradually becoming rational, and reflecting a weaker correlation between A-shares and the cryptocurrency market.
However, the ripple effects in global markets are still evident. The price of tin on the London LME has fallen by more than 10%, while major commodities such as crude oil and natural gas have also dropped around 3%. Precious metals like silver and copper have not been spared. This cross-market volatility indicates that the panic in the cryptocurrency market has begun to seep into the real economy, becoming an 'unstable factor' in the global financial market.
4. Insights and outlook: Cold reflections after the carnival
1. The endgame warning of speculative games
This crash once again confirms the high-risk nature of cryptocurrencies. Unlike traditional assets such as stocks and bonds, cryptocurrencies are not supported by real enterprises or backed by national credit; their prices are entirely driven by market sentiment. When LUNA fell from 119.5 USD to less than 3 cents, and 400,000 investors were liquidated, what we saw was not 'investment failure' but the inevitable outcome after speculative revelry. As market participants say: 'Those caught in a deep trap in trading are not worthy of sympathy because they participated in a rule-less gamble.'
2. The balance between regulation and innovation
The frequent explosions in the cryptocurrency market are forcing the global regulatory system to accelerate its improvement. The United States has passed legislation to regulate trading behavior, China has banned cryptocurrency mining and trading, and the European Union is advancing the implementation of a regulatory framework for crypto assets. These measures are not intended to 'stifle innovation' but are meant to curb financial risks. The value of blockchain technology should not be reflected in speculative trading but should play a role in real-world areas such as supply chain management and digital governance—only by integrating with the real economy can crypto technology achieve sustainable development.
3. Predictions for future market trends
In the short term, the cryptocurrency market will still be in a 'high-volatility hell.' Analysts believe Bitcoin may consolidate in the range of 112,000 to 120,000 USD; if it breaks below the support level, it will drop to 100,000 USD. Ethereum may fluctuate between 4,000 and 4,500 USD, while the declines in altcoins may further widen. In the long term, as global interest rates hover at high levels and liquidity continues to dry up, the cryptocurrency market may enter a 'long winter,' with Bitcoin possibly falling 60% from its peak, and 60% of altcoins dropping below their issuance prices.
For investors, the most rational choice right now is to stay away from leveraged trading and be wary of the 'bottom-fishing temptation.' The history of cryptocurrencies has long proven: there is no asset that only goes up without ever going down, and there are no guarantees in speculation. When the carnival ends, all that remains is a mess—this may be the last warning earned with real money by the 400,000 liquidated investors.
One tree cannot make a forest, and a lonely sail cannot go far! In the crypto circle, if you don't have a good network or firsthand news from the crypto world, it's advisable to follow Lao Wang, who will help you get on board without cost, and you are welcome to join the team!!!
