The market opened with a sharp drop of 6%! It's not a black swan; it's that funds have been withdrawn.

As soon as the opening bell rang on Wednesday, the numbers on the screen left many gasping for breath—the Nasdaq futures plummeted by 1.6%, and Bitcoin fared even worse, crashing 6% within half an hour.

The community was filled with panic voices saying, "The black swan has arrived," and some even hastily cut their positions. But after reviewing three key pieces of data, I quickly realized: this is not an accident, but rather a clear case of "massive fund withdrawal."

The first piece is the Treasury's "liquidity absorption order." After the U.S. government was shut down for 35 days, the TGA account (Treasury General Account) is nearly depleted.

Last week, the Treasury urgently issued $163 billion in short-term government bonds, meaning the market had to absorb real cash, equivalent to withdrawing hundreds of billions in liquidity overnight. The stock market and cryptocurrency sector are essentially driven by capital, so a loss of liquidity leading to a decline was inevitable.

The second piece is the Federal Reserve's "signal of cooling interest rate cut expectations." The statement "the policy path is not yet determined" directly smashed the market's expectations for a rate cut in December from 70% to 45%.

Short-term funds rapidly reduced leverage overnight, with a pile-up of liquidation orders, further tightening an already strained liquidity situation, leading to a rapid drop.

The third piece is the "tight funding dark line" between banks. The scale of the Federal Reserve's emergency liquidity tools has surged to a peak not seen since the pandemic, with overnight interbank lending also showing significant signs of tightening.

On the surface, the market does not lack funds, but active capital is entirely locked up by government bond issuances and reverse repos, unable to flow into the stock market or cryptocurrency sector.

Don't panic; this round of sharp decline is by no means the start of a bear market.

As long as the government shutdown ends and the Federal Reserve sends a moderate signal, the withdrawn funds are likely to flow back quickly.

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