Dominoes Have Started Falling: A Crisis in the Global Asset Price System Seen Through the Bloodshed in the Crypto Market

Market Phenomenon: Chain Liquidation and Asset Restructuring

Recently, the cryptocurrency market has experienced significant volatility. Bitcoin rapidly dropped from $88,000 to below $86,000, with approximately 190,000 traders facing liquidation within 24 hours, resulting in losses exceeding $500 million. From the October high, Bitcoin’s year-to-date decline has exceeded 30%, nearly erasing its annual gains. This is not merely a technical adjustment but a signal of collective liquidation of high-leverage positions—the first domino has fallen.

Distortion of the Global Asset Price System

The most striking phenomenon is the extreme divergence in asset prices. While the crypto market is bleeding, traditional safe-haven assets are performing exceptionally well: silver and platinum have gained nearly 180% year-to-date, and gold has surged to a historic high of $4,400. This not only reflects increased demand for safety but also a deeper collective doubt about liquidity and fiat currency confidence worldwide.

Debt crises become the trigger. According to the latest data, the U.S. national debt has reached $38 trillion. Whether this level of debt can be sustained remains an invisible risk for global markets. Capital is fleeing risk assets with no clear destination, only flowing into commodities regarded as “hard assets.”

Signs of a Tech Bubble Burst

More dangerous signals come from the tech sector. Nvidia’s market value evaporated over one trillion yuan in two days, with giants like Oracle and Broadcom also falling. A Goldman Sachs report indicates that tech industry debt has surged 300% over three years, with AI becoming a bottomless money pit—taking OpenAI as an example, annual losses could reach hundreds of billions. All these signs point in the same direction: the valuation bubble of tech stocks is on the verge of bursting.

Inflationary Pressures and Raw Material Prices

Cost-side pressures are also mounting. Prices of key materials such as battery-grade lithium carbonate and cobalt lithium are soaring, prompting automakers and battery manufacturers to pass costs along. The spark of inflation seems ready to ignite again—cost-push inflation is the hardest to combat.

Analogy to 2008: Different Risk Points

High leverage, asset bubbles bursting one after another, liquidity tightening—these symptoms indeed evoke 2008. But the location of the current “bomb” is different: not in the banking system, but dispersed across leveraged positions in the crypto market, inflated valuations of tech stocks, national debt balances, and even the fragility of global supply chains. The transmission pathways of systemic risk are more complex, making prevention and control more difficult.

Current Strategies

Reduce risk exposure. Contract traders, in particular, need to tighten leverage—survival is more important than profit.

Reassess portfolio structure. AI-related stocks and overvalued small coins require a reevaluation of risk-reward ratios.

Increase allocation to hedging assets. Traditional safe-haven assets (precious metals, long-term bonds) should be moderately increased.

Maintain liquidity. Keep sufficient cash reserves—true bottom-fishing opportunities often appear in the most desperate moments.

History may not simply repeat itself, but it always rhymes in similar patterns. This time, the adjustment of the global asset price system may come faster and more fiercely than expected.