The Storm Behind the Dramatic Fluctuations of ETH: Event Review and Technical Analysis

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2 hours ago

🔍 Event Review

Recently, ETH experienced a sharp fluctuation within just a few hours. Starting from a high of about $3814 around 03:00, the market showed signs of a rapid decline, dropping to a low of approximately $3640. Although there was a brief rebound to $3728.9, the overall trend of severe volatility had not dissipated. The profit-taking by large whale funds, the triggering of leveraged positions leading to liquidations, combined with external policy and macroeconomic uncertainties, catalyzed this market storm, causing market sentiment to shift from mild to extremely tense in an instant.

⏱️ Timeline

  • [03:00] ETH price was around $3814, with initial signs of a downturn in the market.
  • [03:53] Trading activity surged, with Bybit data showing ETH/USDT trading volume skyrocketing over 1019.83%, indicating a sudden increase in selling pressure.
  • [04:07] Whale Alert detected the transfer of 26,336 ETH from FalconX to an unknown wallet, signaling significant capital outflow.
  • [04:31] ETH price fell below the critical $3700 mark, and market panic quickly spread.
  • [04:51] ETH price dropped to about $3660, with a cumulative decline of 4.04%.
  • [04:53] Indian tax authorities launched an investigation into Binance users for suspected tax evasion, significantly increasing external policy risks.
  • [05:00] ETH price further dipped, reaching a low of about $3640.
  • [05:07] A transfer of 14,643 ETH to an unknown wallet was detected, indicating continued capital migration.
  • [05:10] Another 24,674 ETH was transferred to Robinhood, showing unusually active fund flows in the exchange.
  • [05:15] ETH price experienced a brief rebound, rising to $3728.9, but overall market volatility remained severe.

⚠️ Cause Analysis

The sharp fluctuation in ETH's market was primarily driven by two major factors:

  1. Large Capital Operations and Leverage Position Crisis
  • The profit-taking by multiple large whale assets and ongoing market sell orders quickly squeezed liquidity.
  • Continuous triggering of leveraged short positions led to a chain liquidation effect, causing prices to plummet and further intensifying market panic.
  1. Macroeconomic and Policy Uncertainty
  • The turbulent external economic environment (such as uncertainties arising from U.S. government-related issues) heightened risk-averse sentiment.
  • The investigation into Binance users for suspected tax evasion in India, along with other policy risk news, made the market cautious and hesitant about the future, leading to rapid capital withdrawal.

📊 Technical Analysis

Based on the 45-minute candlestick data of ETH/USDT from Binance's perpetual contract, we can observe the following key technical signals:

  • MACD Indicator

  • A death cross has formed and continues to operate below the zero line, issuing a strong sell signal.

  • Bollinger Bands and KDJ

  • The price rebounded from the lower Bollinger Band, indicating some buying interest, but overall it still hovers along the lower band.

  • The KDJ golden cross signal provides a glimmer of optimism for a possible short-term reversal, but the overall strength is weak.

  • Moving Average Performance

  • The price remains below MA5, MA10, MA20, and MA50, with multiple moving averages showing a clear bearish arrangement, indicating a long-term downtrend.

  • All EMA moving averages (EMA5, 10, 20, 50, and 120) also show a downward slope, especially EMA120 with a slope of -0.67%, further confirming the weakening long-term trend.

  • Trading Volume and Liquidation Situation

  • Data shows that the total liquidation amount across the network reached about $30 million in the past hour, with long positions accounting for as much as 73%, indicating dominant selling pressure.

  • Trading volume surged (with a 10-day average increase of 64.02%), and although some data (such as the OBV indicator turning positive) suggests a potential improvement in capital sentiment, overall, the market is in a state of weak short-term momentum.

🔮 Market Outlook

In the short term, the market remains in a state of severe turbulence. Some short-term buying may occur at key support levels, but under the influence of significant selling pressure and the liquidation effect of leverage, the risk of ETH continuing to decline in the short term cannot be ignored.

In the medium term, if macro policy risks ease or are bolstered by institutional capital confidence, ETH may stabilize and rebound after experiencing a technical correction. However, the current multiple negative signals indicate that investors need to pay close attention to the following points:

  • Risk Management: In a tight liquidity and high volatility environment, it is advisable for traders to appropriately reduce positions and set reasonable stop-loss orders.
  • Capital Flow Monitoring: Closely track the movements of large whale funds and the dynamics of funds within exchanges to respond promptly to potential chain effects.
  • Macroeconomic Policy and External Dynamics: Continuously monitor global macroeconomic and regulatory news, as any policy changes could trigger another round of severe market fluctuations.

In summary, the recent rapid decline of ETH reflects the market's fragile state under the dual pressure of internal capital stress and external policy uncertainty. Investors should remain cautious in their operations, closely monitor changes in technical indicators and large capital flows, and manage risks effectively to navigate potential market adjustments amid this storm.

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