Fresh local flash crash: drawing conclusions

BTC/USD

Key zone: 81,500 - 85,000

Buy: 86,500 (on strong positive fundamentals) ; target 90,000-91,500; StopLoss 85,500

Sell: 80,000 (on a pullback after retesting the 82,500 level) ; target 76,500-75,000; StopLoss 81,500

The global sell-off on January 29 became a turning point for the short-term upward trend and showed that the market had remained in a state of euphoria for too long with limited capital inflows.

What should you do if no one wants to buy anymore? Right — sell, and as fast as possible.

A sharp imbalance in volumes triggered a массовый exit of investors from risky assets: not only equities and cryptocurrencies came under pressure, but also gold — both traditional and “digital.”

The first signs of a liquidity crisis appeared several weeks earlier, but market participants continued to build up positions, relying on excessively optimistic expectations. As a result, the market entered a phase of forced correction, when in the absence of new buyers the dominant strategy became rapid position closing.

The key factor behind the sell-off was a situation rare for the modern market: large-scale de-leveraging. Hedge funds and large private investors began to sharply reduce leverage, which triggered a chain reaction of liquidations and intensified pressure on prices.

Technical signals turned out to be secondary: the main catalyst was political risks related to the actions of the U.S. president — threats of new tariffs, escalation in the Middle East, the introduction of a state of emergency regarding Cuba, and expectations of a change in the Fed chair. A kind of “domino effect” with a Trump flavor.

• Additional instability was reinforced by the situation in commodity markets. Brent rose above $70 per barrel, forming an atypical picture in which oil was rising while precious metals were falling. Tariff risks strengthened inflation expectations and pressure on the economy, which was immediately reflected in equities, commodities, and digital assets.
• The technology sector became one of the main sources of the decline. After earnings releases, Microsoft lost about 12%, SAP about 16%, even though the reports themselves cannot be called weak: they simply failed to meet inflated forecasts. The most concrete corporate driver was Microsoft’s drop of around 10% amid concerns about Azure growth rates and the scale of spending on AI infrastructure.
• Indices reacted synchronously: the S&P 500 at one point fell to 1.5%, Nasdaq dropped more sharply due to pressure on the tech sector, and Dow Jones also moved into negative territory. Volatility surged, and investors began reducing positions, primarily in the most expensive and overheated stocks. During the day, all 11 sectors of the U.S. market ended up in the red.
• The crypto market went through a wave of forced liquidations: about 270,000 positions were closed in 24 hours, and total liquidations reached $1.7 billion, mainly in Bitcoin and ETH. The total market capitalization shrank by about $200 billion in just 24 hours.
• Against the backdrop of expectations of tighter Fed policy, rising bond yields, and uncertainty around interest rates, investors massively exited risky assets. In such an environment, selling becomes automatic and is amplified by algorithmic strategies.

The market also destroyed the myth that after the exhaustion of growth in precious metals, capital automatically flows into cryptocurrencies. Gold lost a significant part of its value within 10–15 minutes without clear fundamental signals, silver fell by more than 12%, cryptocurrencies declined on average by 5–7%, and similar dynamics were observed in copper and platinum. At the same time, gold and silver have already recovered about 60% of their decline, while cryptocurrencies continue to move downward.

Large capital in the short term was reallocated into bonds and other more reliable instruments. Even traditionally defensive assets failed to fully perform the role of a safe haven.

The flash crash reflects a systemic liquidity shortage and the consequences of a large-scale reduction in leverage. The sell-off does not represent a full-fledged crisis, but rather a market “penalty” for ignoring geopolitical risks, tariff threats, and political instability. As long as politics remains a source of uncertainty, volatility will stay high, and the probability of new, more destructive waves of sell-offs remains extremely high.

So we act wisely and avoid unnecessary risks.

Profits to y’all!