Author: Xie Zhaoqing, Tencent Finance "Insight"
The cryptocurrency market has erased all gains brought by Trump's inauguration, experiencing an epic plunge. The term "risk," temporarily forgotten by greed, once again stares down all investors with its most ferocious visage.
Over the past week, Bitcoin experienced its largest single-week drop in three years. February 5th became an unexpected day for crypto market participants: Bitcoin fell 13% that day, marking its largest single-day drop since June 2022, and briefly fell below $61,000 in the early hours of February 6th.
In this sharp correction, crypto veteran Yi Lihua "liquidated" 400,000 Ethereum within a week, incurring losses of $700 million, becoming the number one "whale" ruthlessly hunted in this round of暴跌.
This violent回调 caught the market off guard, including those long-term bullish "diamond hands." Worse still, many bullish investors still haven't pinpointed the exact cause of this crash.
Multiple crypto market investors in Hong Kong or Singapore told Tencent News "Insight" that while they couldn't identify a single cause for the暴跌, they unanimously agreed that the immediate trigger was the flash crash in silver and gold prices, which subsequently accelerated the decline of Bitcoin and other cryptocurrencies.
On January 30th, as news broke that the US "hawk" Kevin Warsh was nominated as Fed Chair, market expectations shifted towards the Fed maintaining high interest rates to curb inflation, leading to a stronger US dollar. Silver plummeted over 30% that day. Subsequently, global risk assets came under pressure and fell successively.
A crypto industry entrepreneur in Hong Kong analyzed for Tencent News "Insight" that influenced by Bitcoin's quadrennial halving mechanism, the "four-year cycle" theory of the crypto market remains valid, but with the叠加 of external macro factors, market volatility has significantly increased. The Bitcoin mining reward halving every four years remains the core logic of the "four-year cycle."
"This round of the crypto market's上涨行情 was primarily driven by 'narratives': expectations of pro-crypto policies under Trump's administration, expectations regarding the Fed's policy path, and corporate treasury models like MicroStrategy (MSTR), all seen as bullish factors."
However, including the aforementioned entrepreneur, many industry insiders believe these expectations mostly remain at the narrative level, lacking substantive business innovation.
Believers in the crypto market are convinced: once a narrative is accepted by the market, traditional capital will continuously flow in, thereby driving up Bitcoin demand and prices further. However, these narratives have now clearly "stumbled," losing their real-world support. Unlike staunch crypto market believers, traditional capital or institutions typically rank crypto assets last on their asset allocation lists. Once market volatility intensifies, crypto assets are the first to be sold off.
Yi Lihua's $700 million loss is not just the Waterloo of a top player; it also宣告 the failure of the "old narratives" on which the crypto market has long relied. The market has long been沉醉于 the iron law of the "four-year halving" cycle, the illusion of capital brought by ETF合规, Trump's policy红利, and MicroStrategy-style treasury leverage games. However, this bull run is different from previous ones; it lacks substantive innovation as its骨架, built merely on macro expectations and emotional narratives like a house of cards. When the Fed's hawkish signals popped the bubble, the era of sustaining high valuations solely through storytelling came to an abrupt halt. This marks the crypto market undergoing a brutal祛魅: "faith" without the support of underlying application innovation appears vulnerable when liquidity recedes. The old wealth creation logic has collapsed, forcing the market to search for a true value anchor in the winter.
01 Collapse of Faith: A $700 Million Lesson
The list of crypto market "evangelists" who suffered heavy losses in this Bitcoin暴跌 includes, but is not limited to, Michael Saylor, Tom Lee, and veteran Yi Lihua.
Michael Saylor's listed company, MicroStrategy, currently holds 713,502 Bitcoins, making it the publicly traded company holding the most Bitcoin globally. Tom Lee, known as Wall Street's "Prediction Emperor," is currently the Chairman of the Board of Bitmine, the listed company holding the most Ethereum. Both are long-term, staunch holders of Bitcoin and Ethereum.
Public data shows that the holdings of the listed companies affiliated with Michael Saylor and Tom Lee have seen significant paper losses: MicroStrategy has lost approximately $124 billion, while Bitmine has lost around $60 billion.
Yi Lihua might be the whale "snipered" the fastest in this wave of暴跌. As a public market bull, the 6 account addresses of Yi Lihua's fund are fully transparent.
Starting February 1st, pressured by leverage, Yi Lihua and his team were forced to continuously offload Ethereum, a process the entire network almost witnessed in real-time as they fell into a "death spiral."
Yi Lihua might have once considered continuing the gamble. In the first 4 days of February, he sold only about 190,000 Ethereum and even paused selling on February 5th, still holding 460,000 Ethereum at that time.
On February 4th, Yi Lihua was still expressing on social media that he was "bullish on this round of the bull market" and called it "the best time to buy spot." Public data shows that to deleverage, his liquidation average price dropped from over $2,000 to $1,500.
Yi Lihua is an early participant in the crypto market, reportedly successfully exiting before the "October 11th Event" in 2025, cashing out over $300 million. On October 11, 2025, within 24 hours, Bitcoin's price fell off a cliff from a high of $120,000;粗略 statistics at the time indicated全网爆仓金额 exceeded $190 billion.
Just 3 days later, Yi Lihua no longer held his view and began加速 selling the Ethereum held by his fund, Trend Research.
Data from Arkham shows that on February 6th, Yi Lihua might have decided to give up抵抗, dumping the remaining 440,000 Ethereum in one go. Between 9 PM and 12 AM that night, nearly 60,000 Ethereum were sold.
Yi Lihua might have already made the decision to liquidate during the day on February 6th. Tencent News "Insight" learned that Yi Lihua appeared near Causeway Bay in Hong Kong on the afternoon of February 6th and stayed until around 10 PM before leaving. Yi Lihua on site did not show任何异样. Meanwhile, his team was executing an accelerated liquidation operation.
As of February 7th, the fund under Yi Lihua held only 20,000 Ethereum, with cumulative losses exceeding $700 million.
Some early crypto market investors told Tencent News "Insight": "Selling 630,000 Ethereum means this time, Yi Lihua彻底 surrendered."
The entire process was extremely fast, "losing nearly $800 million in 6 days." Data platform Arkham shows that from陆续建仓 starting November 11, 2025, to January 25, 2026, Yi Lihua's holdings peaked at 651,000 Ethereum; selling began on February 1st, and liquidation took only 6 days.
"A staunch believer like him has already experienced multiple crypto market bull and bear cycles. After making the decision to liquidate, all that might be left is to wait for the next opportunity to翻身," an early market participant told Tencent News "Insight".
Yi Lihua may have become the most well-known Chinese crypto market "veteran" sniped in this round of暴跌. Arkham shows Yi Lihua's cumulative losses in this round reached $779 million, with peak losses一度 hitting $848 million.
02 Capital Backlash: The Cold Exit of Traditional Funds
"Also heavily hit in this暴跌 were some traditional investors who entered the crypto market over the past two years," Albert Luxon, a fund manager at a macro hedge fund in Singapore, told Tencent News "Insight". These traditional funds mostly entered by buying ETFs.
The US approved Bitcoin ETFs in January 2024, after which Bitcoin's price continued to rise, attracting significant traditional capital. Public data shows that US Bitcoin ETFs reached a historical peak in scale in October 2025, when the total assets under management of 12 Bitcoin ETFs were approximately $168 billion. Bitcoin's price also soared to a then all-time high, exceeding $120,000.
"Once market volatility occurs, these traditional funds will prioritize reducing their exposure to the more volatile Bitcoin assets," Albert Luxon told Tencent News "Insight".
Data confirms this. On January 29th, when markets including US stocks experienced significant波动, outflows from Bitcoin ETFs noticeably increased. Public data shows that on January 29th and 30th, during剧烈波动 in US stock and commodity markets, the net outflows from the 12 Bitcoin ETFs were $817 million and $509 million, respectively. Meanwhile, on February 4th and 5th, when Bitcoin's price暴跌, their net outflows were $544 million and $434 million, respectively.
Tencent News "Insight" learned from some private bankers that indeed many high-net-worth clients redeemed their crypto asset allocations over the past week.
03 Narrative幻灭: A New Crypto Winter After False Prosperity
Most would not deny that a new crypto winter has arrived: from Bitcoin's peak of over $120,000 in October 2025 to the current ~$68,000, the price has nearly halved.
Faced with the暴跌, investors are panicking. Explanations for the大跌 vary widely: some believe early investors have taken massive profits after experiencing a bull run; others think Bitcoin's entry into the compliant market, through products like Bitcoin ETFs, has diluted Bitcoin's scarcity; still others attribute it to "liquidity drying up"—almost a universal factor in all financial market crashes.
Allen Ding, head of research at New Huo Technology, said these explanations all have some merit, but the true core driving factor might not be a single answer. He believes the consensus itself might have diverged. In his view, some staunch believers think Bitcoin has now integrated partially into mainstream finance, achieving a certain "milestone," equivalent to "graduating from faith."
Crypto evangelist and investor Anthony Pompliano, analyzing the reasons for Bitcoin's暴跌 on Friday, stated that Bitcoin breaking through $100,000 itself was a significant "milestone."
Many industry insiders, including Allen Ding and Albert Luxon, the macro hedge fund manager in Singapore, stated that "profit-taking" was one of the key drivers of this暴跌.
They believe a large number of early investors were eager to lock in profits, gains that stemmed from the "狂热情绪" triggered by Trump's election promise to make the US the "global crypto hub," which pushed up the prices of assets like Bitcoin and Ethereum significantly.
The returns for these relatively early investors were staggering. Taking Bitcoin as an example, its price soared twofold from Trump's decision to run for office to early October 2025.
"暴跌" or "暴涨" are not uncommon in the crypto market. These seasoned从业者 told Tencent News "Insight" that this round of涨跌 is significantly different from previous ones: the bull market since 2024 has been more about "narratives" than driven by genuine industry innovation.
The Hong Kong-based entrepreneur mentioned that in the crypto market's quadrennial bull-bear cycle, the earliest in 2013 saw the birth of exchanges, 2017 saw smart contracts emerge, and 2022 saw the emergence of DeFi (Decentralized Finance) products: these innovations provided fundamental support for the previous bull runs.
However, this 2024 bull run has nothing to do with innovation; it's primarily "narrative-driven."
He cited examples, from the initial "Trump narrative" to the MSTR treasury model, none of which changed the fundamentals. While Trump did indicate major policies after taking office, the market overlooked the fact that the Trump family was掠夺式地 "sucking money" from the market using cryptocurrency. The treasury company model created by Michael Saylor (the MSTR model), where a listed company buys Bitcoin as an asset, led MicroStrategy to hold over 710,000 Bitcoins. This indeed drove up the stock price and the coin price, with the company's market cap一度 exceeding $1.2 trillion, but this model is unsustainable—the company lost over $120 billion in the last quarter alone.
Tencent News "Insight" learned that in August 2025, top Chinese crypto富豪 like Changpeng Zhao (CZ) and Li Lin were eager to try this model but先后 abandoned it by October 2025.
"Without innovation, relying solely on narratives cannot sustain a prolonged bull market. But they also cannot judge how long a bear market without new narrative接力 will last."
Some more optimistic individuals believe this winter might end faster than previous ones. Currently, aside from Yi Lihua, no other top富豪 or major companies have collapsed or are in crisis, nor are there charges of regulatory violations against institutions—such situations have多次 triggered investor trust crises in past market crashes.
Bitcoin's biggest bull, Michael Saylor, told investors on February 6th that the only way to cope with the current downturn is to hold on—ignore the market volatility—and need to look at the full 4-year cycle.
On February 7th, Bitcoin's price slightly recovered to $68,000, still near its lows over the past two-plus years. This winter will not end shortly, and Bitcoin still has a long way to go before reaching its next milestone of breaking $100,000.
But some bargain-hunting funds have already started acting. Tencent News "Insight" learned that a Hong Kong-based fund began entering the market to buy the dip on February 6th, though the specific scale is unknown. Additionally, New Huo Technology, which provides crypto asset private banking services in Hong Kong, has received many inquiries about buying over the past 2 days.
