July 24, 2025

Yesterday, the market experienced a slight decline, with Ethereum dipping close to 3500 USD and Bitcoin approaching 117000 at one point. Overall, the drop for several mainstream assets was between 5% and 10%, along with over 500 million USD in liquidations in the contract market, of which 380 million were long positions. It can be reasonably speculated that the purpose of this decline is mainly to liquidate the aggressive long positions and accumulate more momentum for the subsequent rise. It is said that bull markets often see sharp declines; in fact, the liquidation volume in the contract market is a good reference indicator. Based on my practical experience, in previous bull markets, the risk signal was when the single-day liquidation volume reached over 1.5 billion (i.e., 10 billion RMB), which basically indicated that a peak was approaching. Considering that the overall market capitalization of the crypto market has increased significantly, this time I will set the critical point for this risk signal between 1.5 to 2 billion USD.
Of course, just because the daily liquidation volume during the decline reached $1.5 billion doesn't mean it will immediately hit the top; on the contrary, the subsequent rebound may be even stronger. However, if there are several consecutive occurrences of liquidation volumes at the hundred billion RMB level, then we need to be quite vigilant. Based on my historical experience, in previous bull markets, the peak often occurred after 2-3 instances of liquidation volumes exceeding the hundred billion level. Looking back at yesterday's data, the liquidation volume was only $500 million, far from the peak level. Therefore, I judge that yesterday's pullback was a reasonable washout in the early stages of the bull market, and the market will soon attack again.
The market is in a bull market, which is believed to be the consensus of over 90% of investors. The most important thing in a bull market is to escape at the peak and prepare for the future.