[Analysis] "Bitcoin, this crash was caused by liquidity exhaustion… not a fundamental weakness"

Bitcoin's rapid $4,000 drop within minutes without any apparent trigger was analyzed as being due to an 'extreme lack of liquidity.'

On the 1st (local time) the Kobeissi Letter said, "Bitcoin's unexplained $4,000 drop within minutes was due to extreme liquidity shortage," and analyzed that "large volatility is particularly concentrated at times when global market participation thins, such as Friday night and Sunday night."

The Kobeissi Letter explained, "With current market leverage levels approaching all-time highs, even small sell orders trigger chain liquidations and create domino-like declines. When large leveraged positions are liquidated in a thin liquidity state, stop-losses and forced liquidations occur in succession, excessively amplifying the drop."

However, it emphasized that this correction is merely a technical decline arising from structural conditions and there is no basis to view it as damage to fundamentals. The Kobeissi Letter diagnosed, "This decline did not occur because Bitcoin's fundamental value or network demand was impaired," and said, "Whether liquidity recovers will determine the future direction."