The cryptocurrency market has given back all the gains brought about by Trump's ascension, plummeting dramatically in an epic fall, allowing the word—'risk', temporarily forgotten by greed, to once again stare menacingly at all investors.
In the past week, Bitcoin experienced its largest weekly decline in three years. February 5th became an unexpected day for cryptocurrency market investors: Bitcoin fell by 13% that day, marking the largest single-day drop since June 2022, and at one point on February 6th, it fell below 61,000 dollars.
In this wave of severe correction, veteran in the crypto circle, Yi Lihua, 'liquidated' 400,000 Ethereum within a week, suffering a loss of 700 million dollars, becoming the number one 'whale' mercilessly hunted in this round of collapse.
This severe correction caught the market off guard, including those long-term bulls who have been holding firmly. Worse still, many bullish investors have yet to clarify the exact causes of this crash.
Multiple crypto market investors in Hong Kong or Singapore told Tencent News (Qianwang) that although they could not pinpoint a single reason for this sharp drop, they unanimously believe that the direct trigger was the flash crash in silver and gold prices, which accelerated the decline of Bitcoin and other cryptocurrencies.
On January 30, as news broke that U.S. 'hawkish' figure Kevin Warsh was nominated as the chairman of the Federal Reserve, the market expected the Federal Reserve to maintain high interest rates to curb inflation, leading to a strengthening of the dollar and a drop in silver prices by over 30% that day. Subsequently, global risk assets began to come under pressure.
An entrepreneur in the crypto industry in Hong Kong analyzed for Tencent News (Qianwang) that the 'four-year cycle' theory in the crypto market is still valid under the influence of Bitcoin's halving mechanism, which occurs every four years, but with the addition of external macro factors, the market's volatility has significantly increased. The halving of Bitcoin mining rewards every four years remains the core logic of the 'four-year cycle.'
"This round of crypto market's upward trend is mainly driven by 'narrative': the pro-cryptocurrency policy expectations after Trump took office, the anticipated policy path of the Federal Reserve, and the corporate treasury model of MicroStrategy (MSTR), all seen as favorable indicators."
However, many industry insiders, including the aforementioned entrepreneurs, believe that the expectations mentioned above mostly remain at the narrative level, lacking substantive business innovation.
Believers in the crypto market firmly believe that once a narrative is accepted by the market, traditional funds will continue to flow in, thus driving up the demand and price of Bitcoin further. However, these narratives have clearly 'suffered setbacks' and lost real support. Unlike the steadfast believers in the crypto market, traditional funds or institutions usually list crypto assets at the bottom of their asset allocation. Once market volatility increases, crypto assets are the first to be reduced.
Yi Lihua's 700 million dollar massive loss not only marks a Waterloo for a top player but also declares the failure of the 'old narratives' that the crypto market relies on for survival. For a long time, the market has been intoxicated by the cyclical iron law of 'four-year halving,' the illusion of funds brought by ETF compliance, and the policy dividends from Trump and the leverage games of MicroStrategy. However, this round of bull market is different from previous ones; it lacks substantial innovation as a backbone and relies solely on macro expectations and emotional narratives to build castles in the air. When the Federal Reserve's hawkish signals burst the bubble, the era of relying solely on storytelling to maintain high valuations comes to an abrupt end. This marks that the crypto market is undergoing a brutal disillusionment: 'faith' unsupported by underlying application innovations proves to be vulnerable in the tide of liquidity retreat, the old wealth creation logic has collapsed, and the market is forced to search for real value anchors in the winter.
01 Collapse of Faith: A Bitter Lesson of 700 Million Dollars
The list of crypto market 'evangelists' that suffered heavy losses in this Bitcoin crash includes, but is not limited to, Michael Saylor, Tom Lee, and the crypto veteran Yi Lihua.
MicroStrategy, the listed company under Michael Saylor, currently holds 713,502 Bitcoins, making it the publicly traded company with the largest Bitcoin holdings in the world. Tom Lee is known as Wall Street's 'prediction emperor' and is currently the chairman of Bitmine, the listed company with the most Ethereum holdings. Both are long-term steadfast holders of Bitcoin and Ethereum.
Public data shows that the listed companies held by Michael Saylor and Tom Lee have already recorded significant paper losses: MicroStrategy lost approximately 12.4 billion dollars, while Bitmine lost approximately 6 billion dollars.
Yi Lihua may be the whale who was 'targeted' the fastest in this round of sharp decline. As a publicly known market bull, all six accounts under Yi Lihua's fund are fully transparent.
Since February 1, due to leverage pressure, Yi Lihua and his team have been forced to continuously sell Ethereum, and the entire network has almost witnessed in real time the process of their falling into a 'death spiral.'
Yi Lihua may have once considered continuing to gamble. In the first four days of February, he only sold about 190,000 Ethereum and paused selling on February 5, when he still held 460,000 Ethereum.
Yi Lihua stated on social media on February 4 that he was "optimistic about this round of bull market" and called it "the best time to buy spot." Public data shows that to deleverage, his average liquidation price dropped from over 2,000 dollars all the way down to 1,500 dollars.
Yi Lihua is an early participant in the crypto market, who successfully escaped the peak before the '10·11 incident' in 2025, reportedly cashing out over 300 million dollars. Within 24 hours on October 11, 2025, Bitcoin prices plummeted from a high of 120,000 dollars, with the total amount of liquidation across the network roughly exceeding 19 billion dollars.
Just three days later, Yi Lihua no longer insisted on his viewpoint and began to accelerate the sale of Ethereum held by his fund, Trend Research.
Data from Arkham shows that on February 6, Yi Lihua may have decided to give up resistance and sold off the remaining 440,000 Ethereum in one go, with nearly 60,000 Ethereum sold between 9 PM and midnight that night.
Yi Lihua may have already made a plan to liquidate during the day on February 6. According to Tencent News (Qianwang), Yi Lihua appeared near Causeway Bay in Hong Kong on the afternoon of February 6 and did not leave until around 10 PM. Yi Lihua on-site did not show any abnormalities. However, at the same time, his team was executing a rapid liquidation operation.
As of February 7, the fund under Yi Lihua only held 20,000 Ethereum, with cumulative losses exceeding 700 million dollars.
Some early investors in the crypto market told Tencent News (Qianwang): "Selling 630,000 Ethereum means that this time, Yi Lihua has completely surrendered."
The whole process was extremely rapid, "losing nearly 800 million dollars in just six days." The crypto data platform Arkham shows that since building positions from November 11, 2025, until January 25, 2026, Yi Lihua's peak holdings reached 651,000 Ethereum; from February 1 onwards, he took only six days to liquidate.
"Believers like him have experienced multiple bull and bear markets in the crypto market. After making the liquidation decision, what remains is likely just waiting for the next opportunity to turn things around," an early market participant told Tencent News (Qianwang).
Yi Lihua may have become the most well-known Chinese crypto market 'veteran' targeted in this round of sharp decline. Arkham shows that Yi Lihua's cumulative loss in this round reached 779 million dollars, with peak losses once reaching 848 million dollars.
02 Capital Retribution: The Cold Departure of Traditional Funds
"This round of sharp drop has also severely impacted some traditional investors who entered the crypto market over the past two years," Albert Luxon, a fund manager from a macro hedge fund in Singapore, told Tencent News (Qianwang). Most of these traditional funds entered the market by buying ETFs.
The U.S. approved Bitcoin ETFs in January 2024, after which Bitcoin prices continued to rise, attracting a large amount of traditional funds. Public data shows that the scale of U.S. Bitcoin ETFs reached a historical high of approximately 168 billion dollars by October 2025, when the total assets under management of 12 Bitcoin ETFs amounted to around 168 billion dollars. At that time, Bitcoin prices also briefly surged to a historical high of over 120,000 dollars.
"Once the market experiences volatility, these traditional funds will prioritize reducing exposure to the more volatile Bitcoin assets," Albert Luxon told Tencent News (Qianwang).
Data corroborates this. On January 29, when the market, including U.S. stocks, experienced significant fluctuations, the outflow of Bitcoin ETFs significantly increased. Public data shows that on January 29 and 30, during the violent fluctuations in U.S. stocks and commodities markets, the net outflow of 12 Bitcoin ETFs was 817 million dollars and 509 million dollars, respectively. Meanwhile, on February 4 and 5, when Bitcoin prices plummeted, the net outflows were 544 million dollars and 434 million dollars, respectively.
Tencent News (Qianwang) learned from several private banking managers that indeed many high-net-worth clients redeemed their asset allocations in the crypto market last week.
03 Narrative Disillusionment: A New Round of Crypto Winter After False Prosperity
Most people would not deny that a new round of winter in the crypto market has arrived: from the peak of Bitcoin exceeding 120,000 dollars in October 2025 to the current approximate 68,000 dollars, the price has nearly halved.
Faced with the crash, investors are panicking. The market has various explanations for this sharp drop: some believe that early investors have massively locked in profits after a bull market; others think that since Bitcoin entered the compliant market, new products like Bitcoin ETFs have diluted Bitcoin's scarcity; and some attribute it to 'liquidity exhaustion'—this is almost a 'universal' factor during crashes in all financial markets.
Allen Ding, head of the New Fire Technology Research Institute, stated that these explanations all make sense to some extent, but the real core driving factors may not be a singular answer. He believes that there may be a divergence in consensus itself. In his view, some steadfast believers think that Bitcoin has now partially integrated into mainstream finance and has achieved some 'milestone,' equivalent to having 'graduated from faith.'
Crypto evangelist and investor Anthony Pompliano, when analyzing the reasons for Bitcoin's current crash, stated that Bitcoin's breakthrough of 100,000 dollars itself is an important 'milestone.'
Many industry insiders, including Allen Ding and Albert Luxon, a fund manager from a macro hedge fund in Singapore, stated that 'profit-taking' is one of the key driving factors behind this sharp drop.
They believe that many early investors are eager to lock in profits, which originated from the 'frenzy' triggered by Trump's election as president and his promise to make the U.S. the 'global crypto capital,' driving up prices of Bitcoin, Ethereum, and other assets significantly.
The returns for these relatively early investors are astonishing. Taking Bitcoin as an example, its price skyrocketed by 100% from Trump's decision to run for president to early October 2025.
"Sharp drops" or "sharp rises" are not uncommon in the crypto market. These industry veterans, who have been deeply involved for many years, told Tencent News (Qianwang) that this round of ups and downs is significantly different from previous ones: the bull market since 2024 is more related to 'narrative' rather than being driven by genuine industry innovation.
The aforementioned entrepreneur in Hong Kong stated that during the crypto market's four-year bull and bear cycle, exchanges were born in 2013, smart contracts emerged in 2017, and DeFi (decentralized finance) products surged in 2022: these innovations provided fundamental support for the previous rounds of bull markets.
However, this time the bull market of 2024 is unrelated to innovation, focusing primarily on 'narrative.'
He cited that from the initial 'Trump narrative' to the MSTR treasury model, there has been no change in the fundamentals. After Trump took office, he did express intentions to introduce significant policies, but the market overlooked the fact that the Trump family was exploiting cryptocurrency to 'siphon' funds from the market. The treasury company model created by Michael Saylor (i.e., the MSTR model), which involves publicly listed companies buying Bitcoin as assets, led MicroStrategy to hold over 710,000 Bitcoins. This indeed pushed up stock and coin prices, with the company’s market value once exceeding 120 billion dollars, but this model is not sustainable—last year's fourth quarter, the company reported a loss of over 12 billion dollars.
Tencent News (Qianwang) learned that in August 2025, leading Chinese crypto billionaires Zhao Changpeng, Li Lin, and others had all attempted this model, only to abandon it in October 2025.
"Without innovation and relying solely on narrative, it is difficult to sustain a prolonged bull market. However, they also cannot judge how long the bear market will last without new narratives to take over."
Some more optimistic individuals believe that this round of winter may end faster than previous ones. Currently, besides Yi Lihua, no leading billionaires or top companies have gone bankrupt or fallen into crisis, nor have any institutions been accused of violations—such situations have previously led to trust crises among investors during market crashes.
Michael Saylor, the largest bull for Bitcoin, told investors on February 6 that the only way to cope with the current slump is to hold on—ignoring market volatility and looking at the entire four-year cycle.
On February 7, Bitcoin prices slightly rebounded to 68,000 dollars, still at a low point over the past two years. This winter will not end in the short term, and Bitcoin still has a long way to go before breaking through the 100,000 dollar milestone.
However, some funds that buy on the dip have already begun to act. Tencent News (Qianwang) learned that a fund in Hong Kong started to buy at the bottom on February 6, with the specific scale currently unknown. In addition, a new technology company providing private banking services for crypto assets in Hong Kong has also received many inquiries about buying in the past two days.
