The Complete Causal Chain of the Cycle 1/ Initial Condition: Tightening of Overall Liquidity Whether the source is central bank QT, strengthened bank capital regulation, reversal of cross-border capital flows, or private sector deleveraging, the overall available "risk-bearing capacity" is declining. 2/ Trigger: Uncertainty Shock Geopolitical events, unexpected policy developments, unexpected data or earnings, or even just a single pulse of volatility can disrupt the fragile balance. 3/ First Round of Reaction: Sell-off of Risky/Marginal Assets + Deleveraging Leveraged funds, risk parity strategies, CTAs, and institutions with insufficient allocation to "marginal" assets withdraw simultaneously. Liquidity in marginal assets (overvalued growth, peripheral credit, high-yield bonds, emerging markets, some commodities, or crypto-related assets) becomes instantly scarce. 4/ Liquidity Redistribution: Systemic Liquidity Concentrates on Core Assets At this point, "certain assets" (sovereign bonds, gold, defensive/policy-supported core equities, and a few types of assets considered "safe" by market consensus) become the only acceptable collateral and allocation targets. Financing capacity tilts towards these assets. 5/ Price and Narrative Reinforcement: Core Asset Prices Rise Continuous capital inflows drive up prices, further validating the narrative that "these assets are the only truly certain ones." The certainty premium is self-confirmed by the market through price signals. 6/ Siphon Effect: Peripheral Asset Liquidity Continues to Deteriorate The rise in core assets is not neutral—it continuously draws remaining liquidity from already fragile peripheral sectors. Widening financing spreads, declining collateral values, and rising margin requirements create a vicious cycle. 7/ Accelerated Feedback: Capital Further Concentrates in the Core Institutional risk control models, passive funds, and even AI trading agents identify core assets with "better past performance, lower volatility, and better liquidity" as the optimal solution, accelerating allocation. 8/ Ultimate Consequence: Reflexivity and Vulnerability The higher the price and concentration of core assets, the deeper the system's dependence on the "certainty narrative." Once even a small crack appears in the narrative (fundamental falsification, policy shift, or external shock), the reversal will be far more severe than the initial shock. Because the margins have long been a liquidity black hole, the buffer mechanism has disappeared, and the implicit accumulation of leverage in the core will be released all at once during deleveraging.