🚀 Event Review

Recently, the ETH market experienced a wave of intense volatility. Following the announcement from the Federal Reserve to cut interest rates by 25 basis points and end the quantitative tightening (QT) program, market sentiment took a sharp downturn. The news mentioned internal disagreements within the FOMC regarding the extent of the rate cut, coupled with data omissions caused by the government shutdown, leading investors to be filled with doubts about future liquidity and inflation trends, prompting institutions and smart trading systems to quickly adjust their positions. Within just a few minutes, the ETH price rapidly declined from around $4013–$4017, briefly dropping to the $3836–$3880 range, and then slightly rebounding with some market funds replenishing, currently reported at around $3926.36.

⏰ Timeline

• 02:00: The Federal Reserve released a message announcing a 25 basis point cut in the federal funds rate, lowering the target range to 3.75%–4%, while also revealing plans to end the balance sheet reduction on December 1. At this time, the ETH price was around $4013–$4017, marking the starting point for the subsequent sharp decline.
• 02:00–02:40: The market was in a heightened state of risk aversion, with some institutions and smart systems rapidly liquidating positions driven by liquidity risk, causing the ETH price to plummet. Some data recorded a decline of 3.42% to 4.40%, breaking through key technical support levels.
• 03:05: After a round of intense fluctuations, some buying gradually entered the market, showing signs of a slight recovery in market sentiment, with the ETH price rebounding to around $3926.36.

🔍 Cause Analysis

1. Uncertainty in Macroeconomic Policy and Economic Data
   The Federal Reserve's announcement of a rate cut and the halt of the balance sheet reduction policy tore away the facade of a long-term rate hike cycle, but there were clear divisions within the FOMC. Some officials believed a larger rate cut was necessary, while another faction preferred to maintain stable rates. Additionally, the government shutdown led to the absence of official economic data, increasing uncertainty regarding future market liquidity and inflation, prompting investors to generally choose to avoid risk and withdraw from risk assets.

2. Market Liquidity Risk and Ultra-Short-Term Liquidation Effects
   Following the core news release, large institutions and algorithmic trading systems quickly adjusted their positions, resulting in a series of large sell orders and automatic liquidations. Due to the high concentration of ultra-short-term funds, once key support levels were breached, it triggered a chain reaction of liquidations and panic, which was a significant reason for the sharp decline in ETH prices in a very short time.

📊 Technical Analysis

This technical analysis is based on Binance USDT perpetual contract 45-minute candlestick data, analyzing the ETH/USDT trading pair. The main observed indicators and conclusions are as follows:

• Bollinger Bands and Rebound: The price rebounded from the lower Bollinger Band, suggesting a potential buying opportunity in the short term.
• KDJ Indicator: A clear death cross and convergence of indicators appeared, providing a warning signal for a downward reversal in the short term.
• OBV Indicator: Crossed above its moving average, showing initial buying signals, but needs to be assessed in conjunction with other trend indicators.
• Moving Average System: The current ETH price is below the MA5, MA10, MA20, MA50, and EMA5/10/20/50/120 moving averages, with all moving averages showing a bearish arrangement, indicating that the overall downtrend remains strong.
• Liquidations and Large Transactions: In the past hour, the total liquidation scale across the network reached $10 million, with long positions accounting for 69%, and a net outflow of about $30 million from major players, indicating abnormal capital movement in the market during intense fluctuations, with high short-term risk.

In summary, although some technical signals (such as OBV moving upward, TD price reversal) may indicate some funds entering the market, the overall moving average system and trading volume still show clear downward signals.

🔮 Market Outlook

In the short term, due to the impact of macroeconomic policies and liquidity risks, the market may continue to maintain a pattern of oscillation and volatility. Although some funds have already entered to replenish, under the strong overall bearish forces and tight moving average arrangements, ETH still faces downward pressure in the short term. Additionally, institutional dynamics and the direction of large capital flows will become important indicators for observing future trends.

In the medium to long term, as the market gradually digests the effects of policy shifts, if there are clear signs of global economic recovery and liquidity improvement, ETH may experience a trend reversal after some time. However, during this period, investors should remain highly cautious, paying attention to changes in technical support levels and macroeconomic data, adjusting positions in a timely manner to avoid sudden liquidation risks.

Overall, this round of intense volatility reflects the vulnerability and high volatility of the cryptocurrency market driven by both macroeconomic policies and market technical factors. Investors should remain highly vigilant about risks and pay attention to subsequent changes in market signals.

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