Event Review 🚨

Recently, the ETH market has experienced significant volatility. Starting around 23:10, some institutions and high-leverage traders triggered liquidation of their positions, leading to panic selling in the market and a rapid release of the liquidation effect. In a short period, the ETH price fluctuated around $4000, then plummeted by over 3% in less than an hour. This round of market activity not only reflects the concentrated outbreak of inherent risks but also mirrors the external shocks brought about by macro policy uncertainties.

Timeline ⏱️

• 10-16 23:10
  The market began to show signs of turbulence, with ETH prices hovering in the $4000–4020 range; some high-leverage positions started facing liquidation risks, and initial panic selling signals were released.

• 10-16 23:56
  In just 46 minutes, the ETH price dropped sharply from $4019 to $3890, a decline of approximately 3.22%. This was mainly due to large long positions triggering a chain of liquidations, resulting in a sudden decrease in market liquidity.

• 10-17 00:25
  Under continued selling pressure, the ETH price further dipped from about $4002 to $3866, before slightly rebounding to around $3880.48. During this period, external macro factors intertwined with the internal liquidation effects, significantly widening the price fluctuation range.

Cause Analysis 🔍

The severe market volatility primarily stems from two interacting factors:

1. High-leverage position liquidations triggering chain liquidations
   Several institutions and high-leverage traders faced liquidations during the price correction, releasing a large amount of selling pressure and rapidly depleting market liquidity. In a short time, hundreds of millions of dollars in long positions were liquidated, causing the ETH price to drop sharply and creating a clear chain reaction.

2. Macroeconomic policy uncertainties heightening market risk aversion
   External factors such as government shutdown risks, interest rate cut expectations, and other uncertainties in policy transmission led to a sharp decline in market risk appetite. Under the influence of these uncertainties, investors chose to liquidate positions to avoid risks, further spreading panic selling and accelerating the price decline.

Under the interaction of these two factors, there was both structural selling pressure from liquidation and a depressed market sentiment triggered by external macro risks, jointly driving ETH's significant decline in the short term.

Technical Analysis 📊

Based on the 45-minute K-line data of Binance USDT perpetual contracts, the current technical indicators show clear bearish signals, as follows:

• Oversold indicators and KDJ observation
  The current J value is in the extremely oversold zone, and the KDJ indicator shows a divergence in trends, suggesting that there may be a rebound opportunity in the short term, but the overall downward momentum remains strong.

• OBV changes and abnormal trading volume
  The OBV indicator has fallen below previous lows and turned negative, indicating that selling pressure is continuously increasing. Meanwhile, trading volume surged by 190.85%, with price and volume diverging, showing that the market is in a state of panic selling. The current trading volume is not only significantly higher than the 10-day average but also within the top 10% of recent cycles.

• Moving average system and MACD trend
  Prices are currently below MA5, MA10, MA20, and MA50, with moving averages showing a bearish arrangement; simultaneously, all EMAs (including EMA5/10/20/50/120 and EMA24/52) indicate a strong downward trend. The MACD histogram has been continuously shrinking, reflecting that the downward momentum is strengthening, with a weak technical trend in the short to medium term.

• Liquidation and large transactions
  Recent statistics show that the total liquidation amount across the network in the last hour was about $10 million, with long positions accounting for as much as 94%, and a net outflow of approximately $4 million, further confirming the significant selling pressure and lack of liquidity in the market.

Market Outlook 🔮

Although ETH currently faces strong downward pressure due to high-leverage liquidations and macro uncertainties, some technical indicators (such as the extreme oversold zone) suggest that the market may also experience a technical rebound in the short term. Future trends should focus on the following aspects:

• Key support level observation
  Investors should closely monitor the important support level around $4000 and changes in trading volume to assess whether panic selling has subsided.

• Macroeconomic policies and market sentiment
  As external factors such as government shutdown risks and interest rate cut expectations continue to evolve, market risk aversion may persist in the short term. Investors should implement risk control measures to prevent chasing high risks.

• Liquidity recovery and long-short dynamics
  If the market shows structural improvement and liquidity recovers, it may lay the foundation for a rebound. However, in a state where long and short forces are still in flux, it is advisable for investors to maintain cautious positioning and closely track the subsequent impacts of the liquidation wave.

Overall, the current volatility in the ETH market serves as a warning bell for investors. In a time where risks and opportunities coexist, investors should pay attention to internal liquidation data and external policy dynamics, adjusting their positions in a timely manner to seek more stable operational opportunities amid future fluctuations.

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