A Complete Summary of the Current Market Liquidity Crisis and the Causes Behind the Decline in Nvidia & Bitcoin
Recently, the global financial market has entered a phase of “composite macro stress,” where almost all asset classes — stocks, crypto, and bonds — are shaking simultaneously. Nvidia is barely holding the $180 support level, becoming a key variable in determining tech-sector direction, while Bitcoin has accelerated downward after breaking a major psychological support level, significantly increasing overall market anxiety.
On the surface, it may look like the AI bubble debate is resurfacing, but the true nature of this downturn can be summarized as **a predictable liquidity crunch**. U.S. credit card delinquency rates and commercial real estate (CRE) delinquencies are now more vulnerable than during past crisis phases such as the financial crisis, dot-com bubble, and oil shock, showing that both households and companies are experiencing worsening cash flow.
Wages have stagnated while inflation remains persistently elevated, continuously reducing real purchasing power. This creates a negative feedback loop: declining consumption → declining corporate revenues → shrinking margins → falling stock prices. Naturally, investors shift toward holding cash over unstable assets, draining liquidity from markets and sharply weakening price momentum.
1. Liquidity Contraction and Market Instability
The current liquidity issue is not just “psychological anxiety” but a structural problem. The weak yen and the Bank of Japan’s move toward policy normalization are clear examples of weakening global liquidity. Japan remains one of the world’s biggest liquidity providers, and the unwinding risk of yen carry trades (borrowing cheap yen to invest in risk assets) is directly impacting U.S. markets.
When combined with political uncertainty, investors increasingly shift toward a mindset of “holding cash and waiting”. This is the clearest trait of the current market. Even when stocks look attractive, investors avoid buying; even when opportunities appear, they hesitate. In other words, liquidity exists, but it is not flowing into asset markets.
2. Retail Sales Slowdown and Corporate Earnings Pressure
One of the most serious warning signs is the **sharp decline in retail-related stocks**. This is not about individual company issues; it reflects a direct slowdown in U.S. consumer spending, which is the immediate precursor to corporate profitability deterioration.
The drop in Visa and Mastercard stocks follows the same logic. Reduced consumer spending → reduced transaction volume → weakened growth prospects for financial and fintech sectors. During bull markets, these signals are often ignored, but in correction phases, previously hidden issues re-emerge and amplify market pressure.
3. The Rate-Cut Dilemma — “Even if rates fall, will markets rise?”
Ultimately, rate cuts are necessary to improve liquidity. But Wall Street consistently raises the same concern:
“Even if the Fed cuts rates, what if the money still doesn’t flow into markets and goes to cash instead?”
This is a realistic concern. If recession fears intensify, rate cuts themselves could be interpreted as a “signal of economic deterioration,” hurting sentiment rather than helping it. Even so, Fed officials acknowledge current market instability, and political pressure is strong during an election cycle — making it difficult for the Fed to take actions that could hurt financial markets.
Therefore, the market has not fully abandoned expectations for a December rate cut. The combined pressure of “political burden + financial stability” may still push the Fed toward easing.
4. Nvidia — Stuck in a Box or Ready to Break Out?
Despite strong earnings, Nvidia has failed to decisively break above $200, repeatedly touching but falling back. Only a solid close above $200 would trigger new buying momentum and confirm a breakout.
Nvidia’s current structure can be summarized as:
- 180–200: Sideways box range
- Strong close above 200: Clear trend reversal signal
- Break below 180: High risk of deeper correction
In short, Nvidia has lost short-term direction and is extremely sensitive to liquidity flows.
5. Bitcoin — 100K Breakdown Sparks Accelerated Decline
Bitcoin broke its critical 100K support, triggering a series of stop-loss orders and cascading automated sell-offs. Currently, Bitcoin is highly correlated with stock market liquidity, meaning volatility may persist until the equity market stabilizes.
Major support zones are:
- 1st support: 85K
- 2nd support: 82K
- 3rd support: 76K (break → path toward 60K opens)
It is important to note **76K has no special technical significance**. Therefore, predictions of exact levels are less effective than responding to real-time market behavior.
6. Investment Perspective — Avoid Chasing, Focus on Observation & Reaction
Interpreting Walmart’s rebound as “flight to safety” is too theoretical. Walmart historically moves slowly and tends to rebound at support zones. In a broad market downturn, Walmart will also decline.
For S&P 500 E-mini futures, the 6,500 area is a critical support zone. A drop below this could trigger another panic-selling phase, so emotional control is extremely important.
Large-cap growth stocks like Tesla and Nvidia should not be bought aggressively at current prices. It is better to **wait and confirm the next support levels** before entering. Currently, market direction matters far more than individual stock momentum.
Thus, the most important principles in the current market are:
- Buy during declines (use proper scaling)
- Never chase upward momentum
- Stay out if major support breaks
- Continuously monitor overall market health
The greater the uncertainty, the more likely long-term survival belongs to investors who stay patient and wait for clear signals.
