Tencent Finance “Periscope”
Text | Xie Zhaoqing
Editor | Liu Peng
The cryptocurrency market has retraced all the gains brought by Trump’s rise to power, experiencing an epic crash that has once again cast the long-forgotten word—“risk”—in its most ferocious form, glaring at all investors.
Last week, Bitcoin experienced its largest single-week decline in three years. February 5th became an unexpected day for crypto market investors: Bitcoin fell by 13% that day, marking the largest single-day drop since June 2022, and briefly dipped below $61,000 in the early hours of February 6th.
During this intense correction, veteran crypto investor Yi Lihua “liquidated” 400,000 Ethereum within a week, incurring a loss of $700 million, making him the top “whale” ruthlessly hunted in this round of crash.
This sharp correction caught the market off guard, including long-term bullish “steadfast holders.” Even more concerning, many long-position investors still have not clarified the exact cause of this collapse.
Several crypto investors in Hong Kong or Singapore told Tencent News “Periscope” that, although the specific trigger for this plunge cannot be pinpointed, they unanimously agree that the immediate catalyst was the flash crash in silver and gold prices, which further accelerated the decline of Bitcoin and other cryptocurrencies.
On January 30th, news broke that U.S. “hawkish” figure Kevin Warsh was nominated as Federal Reserve Chair, leading the market to expect the Fed to maintain high interest rates to curb inflation. The dollar strengthened accordingly, and silver plummeted over 30% that day. Subsequently, global risk assets came under pressure and declined.
A crypto industry entrepreneur in Hong Kong told Tencent News “Periscope” that, influenced by Bitcoin’s four-year halving cycle, the “four-year cycle” theory remains valid. However, when combined with external macro factors, market volatility has significantly increased. Bitcoin’s mining reward halving every four years remains the core logic of this “four-year cycle.”
“This recent rally in the crypto market was mainly driven by narratives: expectations of pro-cryptocurrency policies after Trump took office, the Federal Reserve’s policy outlook, and corporate treasury models like MicroStrategy (MSTR), all viewed as positive signals.”
However, several industry insiders, including the entrepreneur mentioned above, believe that most of these expectations are merely narratives, lacking substantive business innovation.
Crypto believers are convinced that once narratives are accepted by the market, traditional funds will continue to flow in, further boosting Bitcoin demand and prices. But now, these narratives have been significantly “disrupted,” losing their real-world support. Unlike steadfast crypto believers, traditional funds or institutions typically rank crypto assets at the bottom of their asset allocation lists. When market volatility intensifies, crypto assets are among the first to be sold off.
Yi Lihua’s $700 million loss is not only a setback for a top player but also a declaration that the “old narratives” sustaining the crypto market have failed. For a long time, the market has been intoxicated with the “four-year halving” cycle, the illusion of capital from ETF compliance, and the policy dividends from Trump and MicroStrategy-style treasury leverage games. However, this bull market is different from previous ones; it lacks substantive innovation as its backbone, relying solely on macro expectations and emotional narratives to build castles in the air. When hawkish signals from the Fed burst the bubble, the era of maintaining high valuations through storytelling abruptly ends. This marks a brutal disillusionment in the crypto market: without underlying application innovation to support “faith,” it becomes fragile in liquidity downturns. The old wealth-creation logic has collapsed, and the market is forced to seek genuine value anchors in the winter.
Collapse of Faith: A $700 Million Tragic Lesson
Among the “evangelists” who suffered heavy losses in this Bitcoin crash are, but not limited to, Michael Saylor, Tom Lee, and veteran crypto investor Yi Lihua.
Michael Saylor’s publicly listed company MicroStrategy currently holds 713,502 Bitcoins, making it the largest corporate holder of Bitcoin worldwide. Tom Lee, known as Wall Street’s “Forecast King,” is the chairman of Bitmine, the publicly listed company with the largest Ethereum holdings. Both are long-term steadfast holders of Bitcoin and Ethereum.
Public data shows that the holdings of Michael Saylor’s and Tom Lee’s companies have experienced significant paper losses: MicroStrategy has lost about $12.4 billion, and Bitmine about $6 billion.
Yi Lihua may be the fastest “sniped” whale in this crash. As a publicly known bullish market participant, all six accounts of Yi Lihua’s fund are transparent.
Since February 1st, under leverage pressure, Yi Lihua and his team have been forced to continuously sell Ethereum, with the entire network witnessing his fall into a “death spiral” almost in real-time.
Yi Lihua may have considered continuing to gamble for a while. In the first four days of February, he sold only about 190,000 Ethereum, and paused selling on February 5th, still holding 460,000 Ethereum at that time.
On February 4th, Yi Lihua publicly expressed optimism about this bull run, claiming “now is the best time to buy spot.” Public data shows that to de-leverage, his average liquidation price has dropped from over $2,000 to $1,500.
Yi Lihua is an early participant in the crypto market, having successfully escaped the top before the “10.11 incident” in 2025, reportedly cashing out over $300 million. On October 11, 2025, Bitcoin’s price plummeted from a high of $120,000 within 24 hours, with estimated total liquidations exceeding $19 billion.
Just three days later, Yi Lihua had already stopped holding his stance and began accelerating the sale of Ethereum held in his fund Trend Research.
According to Arkham data, on February 6th, Yi Lihua likely decided to give up resistance and sold the remaining 440,000 Ethereum in one go, nearly 60,000 of which were sold between 9 p.m. and midnight that night.
He may have already planned to liquidate all his holdings during the daytime of February 6th. Tencent News “Periscope” learned that Yi Lihua appeared in Causeway Bay, Hong Kong, in the afternoon of February 6th and stayed until around 10 p.m. before leaving. He showed no signs of abnormality. Meanwhile, his team was executing an accelerated liquidation.
As of February 7th, Yi Lihua’s fund held only 20,000 Ethereum, with accumulated losses exceeding $700 million.
Some early crypto investors told Tencent News “Periscope,” “Selling 630,000 Ethereum means Yi Lihua has completely surrendered this time.”
The entire process was extremely fast—“lost nearly $800 million in 6 days.” Arkham data shows that since building positions starting November 11, 2025, Yi Lihua’s peak holdings reached 651,000 Ethereum by January 25, 2026; from February 1st, he sold off in just 6 days to fully liquidate.
“Someone as steadfast in faith as him has experienced multiple bull and bear markets in crypto. After deciding to liquidate, all that’s left is to wait for the next rebound,” said an early market participant to Tencent News “Periscope.”
Yi Lihua may have become the most well-known Chinese veteran in this crash. Arkham shows that his total losses in this round reached $779 million, with peak losses once hitting $848 million.
Capital Backlash: The Ruthless Exit of Traditional Funds
“In this crash, some traditional investors who entered the crypto market over the past two years have also been heavily hit,” said Albert Luxon, a fund manager at a macro hedge fund in Singapore, to Tencent News “Periscope.” Most of these traditional funds entered by buying ETFs.
In January 2024, the U.S. approved Bitcoin ETFs, and Bitcoin prices continued to rise, attracting a large influx of traditional capital. Public data shows that the scale of U.S. Bitcoin ETFs reached a record high in October 2025, with the total assets under management of 12 Bitcoin ETFs approximately $168 billion. Bitcoin’s price also hit a new all-time high, exceeding $120,000.
“When the market fluctuates, these traditional funds tend to reduce their holdings of more volatile Bitcoin assets first,” Luxon said.
Data supports this. During the major market swings on January 29th, including U.S. stocks, Bitcoin ETF outflows increased significantly. Public data shows that on January 29th and 30th, during sharp fluctuations in U.S. stocks and commodities, the net outflows of the 12 Bitcoin ETFs were $817 million and $509 million, respectively. On the sharp decline days of Bitcoin on February 4th and 5th, net outflows were $544 million and $434 million.
Tencent News “Periscope” learned from some private banking managers that many high-net-worth clients redeemed their crypto assets during the past week.
Disillusionment of Narratives: A New Crypto Winter After False Prosperity
Most people do not deny that a new crypto winter has arrived: from the peak of over $120,000 in October 2025 to about $68,000 now, nearly halving in price.
Faced with the plunge, investors are panicking. Explanations for this crash vary: some believe early investors have taken large profits after a bull run; others think that since Bitcoin entered the compliant market, new products like Bitcoin ETFs have diluted Bitcoin’s scarcity; still, others attribute it to “liquidity exhaustion”—a nearly universal factor in financial market crashes.
Allen Ding, head of the Xinhuo Technology Research Institute, said these explanations have some truth, but the core driver may not be a single answer. He believes that there may be a divergence in consensus itself. In his view, some steadfast believers think Bitcoin has now partially integrated into mainstream finance and has reached a certain “milestone,” akin to “graduating” from faith.
Crypto evangelist and investor Anthony Pompliano analyzed the reasons for Bitcoin’s recent crash on Friday, stating that Bitcoin surpassing $100,000 itself is an important “milestone.”
Many industry insiders, including Allen Ding and Albert Luxon, believe that “profit-taking” is one of the key drivers of this crash.
They think that many early investors rushed to lock in profits, driven by the “frenzy” sparked by Trump’s election and his promise to make the U.S. the “global crypto capital,” which significantly boosted the prices of Bitcoin, Ethereum, and other assets.
The gains of these relatively early investors are astonishing. For example, from Trump’s decision to run for office until early October 2025, Bitcoin’s price doubled.
“Sharp declines” or “sharp rises” are not uncommon in the crypto market. Industry veterans told Tencent News “Periscope” that this cycle’s ups and downs are quite different from previous ones: since 2024, the bull market has been more about “narratives” than genuine industry innovation.
The Hong Kong entrepreneur mentioned above said that during the four-year bull-bear cycles, the earliest innovations appeared: exchanges in 2013, smart contracts in 2017, and DeFi (Decentralized Finance) products in 2022. These innovations provided fundamental support for previous bull markets.
However, this 2024 bull market is unrelated to innovation; it is mainly driven by “narratives.”
He gave an example: from the initial “Trump narrative” to the MicroStrategy treasury model, the fundamentals haven’t changed. Trump did announce major policies after taking office, but the market overlooked the fact that Trump’s family was exploiting cryptocurrencies to extract money from the market in a predatory manner. Michael Saylor’s treasury company model (the MSTR model), which involves listed companies buying Bitcoin as assets, led MicroStrategy to hold over 710,000 Bitcoins. This indeed boosted stock and coin prices, with the company’s market cap once exceeding $120 billion. But this model is unsustainable—last quarter, the company lost over $12 billion.
Tencent News “Periscope” learned that in August 2025, top Chinese crypto billionaires Zhao Changpeng and Li Lin attempted this model but abandoned it by October 2025.
“Without innovation, relying solely on narratives cannot sustain a bull market. But they also can’t judge how long a bear market without new narratives will last.”
Some more optimistic people believe this winter could end faster than previous ones. Currently, aside from Yi Lihua, no top billionaire or leading company has gone bankrupt or fallen into crisis, nor are there reports of institutions being accused of violations—conditions that have repeatedly triggered investor trust crises in past market collapses.
Bitcoin’s biggest bull, Michael Saylor, told investors on February 6th that the only way to cope with the current downturn is to hold on—ignore market volatility—and look at the full four-year cycle.
On February 7th, Bitcoin rebounded slightly to $68,000, still near lows of over two years. This winter won’t end in the short term, and Bitcoin still has a long way to go before reaching the next $100,000 milestone.
However, some funds that buy on dips have already started action. Tencent News “Periscope” learned that a Hong Kong-based fund began bottom-fishing on February 6th, though the specific scale is unknown. Additionally, Xinhuo Technology, which offers private crypto asset banking services in Hong Kong, has received many inquiries about buying in over the past two days.
