The localized liquidity shocks occurring in the crypto market recently go beyond mere psychological contraction, exposing the structural vulnerability (operational fragility) of the market as a whole. With the U.S. Federal Reserve’s high-interest rate stance and a sharp decline in Bitcoin spot ETF trading volume (down 78% from last October's peak) persisting, the market's liquidity strength is significantly weakened.

The most distinct warning signal is the price volatility emerging from thin order books. On the 19th, a flash crash occurred in the Bithumb USDC/BTC market, where the price of USDC plummeted by 43% in an instant. Although it recovered quickly, it exposed the vulnerability of markets with thinner order books compared to the KRW market. The BNB Chain-based SIREN token also plunged 95% in a single day due to a massive sell-off by a single whale, demonstrating the risks posed by concentrated supply in a liquidity-deprived environment.

This decline in resilience is also observed in the performance of newly listed assets. Although Upbit listed nine altcoins sequentially, they failed to sustain the listing momentum seen in the past and were overshadowed by the market downturn. Even as long-term positive institutional news continues (such as the $30 million APEC investment), the sentiment felt by the retail market remains different. With added regulatory noise, such as the lawsuit against Polymarket and Kalshi by the Kentucky Attorney General in the U.S., the Fear & Greed index remains in the 'Extreme Fear' zone (15–20).

Ultimately, the current period of fear is not just about psychological contraction, but a structural problem rooted in systemic liquidity fragmentation and the vulnerability of small to medium-sized pools. With order book depth becoming thinner, prices can swing violently even on small sell orders; therefore, investors need to maintain a conservative outlook for the time being and prepare for the possibility of sudden price spasms.