Bitcoin's recent decline may seem fierce, but it is actually the result of short-term game theory. The reasons for the market cooling off are quite clear.

First and most directly — the Federal Reserve has stirred the pot. Recently, there was a widespread expectation that interest rates would be cut in March next year, which would mean more liquidity. As a result, funds flooded into the crypto market. But lately, strong US employment data has been released, and the Fed may not be in such a hurry to act. Expectations have reversed, and some short-sighted capital has started to withdraw.

At the same time, the US stock market is also "taking money." Tech stocks hit record highs, with stable returns and short cycles, making them very attractive to funds. Many people have simply shifted their crypto holdings to US stocks to chase hot spots.

Plus, there's the year-end institutional accounting. December is the fund settlement season, and institutions holding Bitcoin are taking profits after gains, which further adds short-term pressure to the market.

But don’t rush to be bearish. Compared to past crashes, this time has actually sent two positive signals: the futures market hasn't experienced a crazy liquidation wave, and large investors are mostly staying put. This indicates that long-term believers are still holding on.

The key upcoming windows are these two: the CPI data on December 12 and the Federal Reserve meeting on December 14. If inflation is under control and the Fed’s tone isn’t so hawkish, market confidence can quickly recover. On the technical side, $85,000 is a relatively strong support level worth watching.

For retail investors, this is a time to either wait and see or make small-scale positions. Never chase highs or sell in panic. The market’s direction will become clear very soon.