‘That night, Bitcoin dropped from $7,000 to $3,800, the trading system remained stable, contracts were liquidated accurately, while tens of billions of leveraged funds vanished in the ruthless liquidity.’

One, the 312 Incident: that night, no one could escape

On March 12, 2020, one of the darkest nights in cryptocurrency history.

We later referred to it as the '312 Incident'.

That day:

  • Bitcoin plummeted over 50%;

  • BitMEX continuously liquidated positions, and the market lost support;

  • Market makers collectively withdrew, on-chain funds fell into ruin;

  • The entire market completed a system-level massacre in a very short time.

But strangely, there was no system error; all operations were 'successfully completed'. Everything was running too efficiently.

Liquidity hasn’t disappeared; it has instead become the executioner's blade.

Two, what is liquidity? It’s not a lubricant, but a knife

In our conventional understanding:

‘Good liquidity’ means the market is healthy, trading is smooth, and prices are real.

But in the cryptocurrency market, liquidity is not water; it is a knife. Especially in a downturn, it is precise and ruthless.

  • Panic sell orders surge in, buy-sell matching is completed quickly;

  • Market makers and arbitrage robots are highly active, prices fluctuate violently;

  • The automatic liquidation mechanism executes coldly, and chain liquidations follow one after another.

Good liquidity? No, it just executes your fear without emotion.

Three, why does liquidity seem 'better' as the market falls?

This seems to be a paradox.

The market is clearly collapsing; why does trading seem to go more smoothly?

The reason is simple—human nature:

1. Fear pushes you to sell hastily

You don’t want to lose more, so you click 'sell'. But you’re not running alone; the entire market is cutting losses.

2. Greed lets robots rush in to arbitrage

Arbitrageurs, high-frequency traders, and market-making algorithms were already prepared. The more urgently you sell, the more they profit.

3. The system never hesitates; it automatically liquidates to the end

In the world of on-chain contracts, liquidation is not called out; it is ‘completed in an instant’.

It won't remind you 'Do you really want to sell?'

It only recognizes logic, not tears.

Four, the tragic efficiency of the financial system: machines are running, people are collapsing

What is most awe-inspiring in the crypto world is not hackers or scams, but the system's execution that is cold to the point of aesthetics.

🩸 Case 1: LUNA Crash

  • Algorithms automatically increase LUNA supply; the inflation spiral begins;

  • On-chain liquidity pools are mercilessly drained;

  • All liquidation logic is 'perfectly executed';

  • In the end: the coins are gone, and the faith is gone.

🩸 Case 2: FTX Trust Collapse

  • Funds quickly drained on-chain;

  • Stablecoin exchange rates instantly de-pegged;

  • On-chain contracts run without bugs;

  • The market collapsed, but the system made no mistakes.

🩸 Case 3: BitMEX 'Pulling the Plug' Incident

  • Liquidation was too fast; BTC was once close to 'zero';

  • BitMEX servers crashed for 25 minutes;

  • This may be the only time in history when the system 'stopped' with 'humanity'.

What truly reflects human nature is not when the system executes, but when it 'deliberately does not execute'.

Five, liquidity is not security, but a trigger pressed in your hand

We once thought:

  • High liquidity = safety

  • System auto-execution = fairness

  • Active trading = health

But in fact:

  • That was the ultimate expression of market fear;

  • That was the liquidation button you pressed actively;

  • That was the system executing most smoothly at your weakest moment.

Liquidity is not always friendly.

It’s more like a knife, precisely cutting your orders deep into the market when you hesitate.

Conclusion: It’s not the market that is efficient, but the executioner's actions

In the world of crypto, the most 'smooth' moments are often the most 'painful' moments.

When everyone is fleeing, and the system is running steadily, that is not rationality; it is tragedy.

It’s not the market that’s wrong; it’s human nature that is exposed.

The system is very stable, and trading is very efficient.

And we were only executing a script written by fear.

$BTC