Event Review ⚡

Recently, the Ethereum market experienced a significant fluctuation. A combination of factors, from substantial capital transfers to massive position liquidations, led to a rapid decline in ETH prices within a short period. The market saw a flow of funds, continuous liquidation events, and some well-known accounts being forced to stop-loss and close positions, all of which drastically changed market sentiment and pushed prices downward. This unusual market volatility not only reflects the chain liquidation effect brought about by high-leverage trading but also draws attention to the impact of macroeconomic policy uncertainties on the cryptocurrency asset market.

Timeline ⏰

• 23:11: A significant capital movement occurred in the market, with approximately $1.8 billion worth of ETH being dispersed from a whale account into multiple wallets; at the same time, long positions in ETH, BTC, and SOL on Hyperliquid accumulated unrealized losses exceeding $37 million, raising concerns about whale position adjustments.
• 23:28: The supply of Ethereum on exchanges dropped to a multi-year low, reflecting an increase in cautious sentiment among traders and a decrease in short-term selling pressure, making liquidity signals particularly noteworthy.
• 23:31: A well-known account triggered a stop-loss due to the market rebound, closing approximately 25,000 ETH short positions, resulting in a loss of about $2.1 million, revealing concerns about the chain liquidation risk faced by high-leverage positions.
• 23:41: After recording a price of $2,983, ETH quickly declined, with selling pressure surging in the market.
• 23:41 to 23:53: In just 12 minutes, the price of ETH plummeted from $2,983 to $2,901, a drop of 2.75%, indicating strong selling pressure in the market.
• 23:41 to 00:25: Another set of data indicated that the price further declined from $2,905 to $2,844, with a cumulative drop of about 2.11%.
• 00:26: After the intense fluctuations, the price of ETH slightly rebounded to $2,854.63, and the market began to gradually enter a consolidation phase.

Reason Analysis 🔍

1. Macroeconomic and Policy Uncertainty
   Recently, the Federal Reserve has continuously lowered interest rates and made related policy statements, coupled with comments from Trump and other senior officials regarding interest rates and monetary policy, creating a highly variable outlook for global liquidity. This uncertainty in the external environment has led to a decrease in market risk appetite, reducing tolerance for high-risk assets and exacerbating price volatility.

2. Chain Liquidation Effect of High-Leverage Trading Positions
   Due to some institutions and whale accounts using high-leverage trading, once market sentiment weakens, a large number of stop-loss orders and liquidation actions are triggered. In this market situation, multiple accounts were forced to liquidate quickly due to a brief rebound, creating a chain reaction that further amplified selling pressure. Meanwhile, the total scale of liquidations across the network reached $10 million, with long positions accounting for 93%, marking the fragility of the leveraged market.

3. Changes in Market Liquidity and Capital Transfer
   The massive capital dispersion and the supply of exchanges hitting a recent low indirectly indicate that some funds are retreating from existing positions to cope with market uncertainties. This tightening of liquidity also provided momentum for subsequent chain liquidations and price crashes.

Technical Analysis 📈

Based on the 45-minute candlestick chart data of the Binance USDT perpetual contract ETH/USDT, the current technical indicators show multiple bearish signals:

• Death Cross of Moving Averages: The short-term EMA5 has crossed below EMA10, and EMA10 has crossed below EMA20, indicating a bearish trend in the short to medium term. The price is currently below EMA5, EMA10, EMA20, and even longer-term moving averages, suggesting that bears control the overall market.
• MACD Indicator: The MACD line has formed a death cross below the zero axis, further confirming the sell signal; at the same time, the medium-term trend is also in a downward state.
• RSI Indicator: The RSI has fallen below the 50 midline, indicating insufficient market momentum, with bearish forces prevailing.
• Bollinger Bands and %B Indicator: The price has successively broken below the middle and lower bands of the Bollinger Bands, while the %B indicator has dropped below 0, suggesting that the market may enter an oversold area, but the current overselling reflects panic selling characteristics rather than a stable rebound.
• Abnormal Trading Volume: During the price decline, trading volume surged by 312.45%, indicating that panic selling and institutional liquidations dominated in a short period. When trading volume continues to increase and both short-term and long-term average volumes show significant rises, although market activity is enhanced, it more reflects urgent selling and capital withdrawal phenomena.

Market Outlook 🌅

Currently, although the ETH market has experienced a significant decline, there are signs of some recovery after the intense fluctuations. Technical indicators suggest that the market may be in an oversold range, and if strong buying interest emerges subsequently, a short-term rebound is possible; however, from a medium to long-term perspective, uncertainties related to the macroeconomic environment and high-leverage positions still exist, and market sentiment may continue to be under pressure.

Investors should pay attention to the following key points:

• Closely monitor macro policy dynamics and liquidity changes to assess future market risks;
• Pay attention to changes in exchange supply and large capital flows, as these are important signals for the market's subsequent trends;
• On the technical front, if the price can break through and stabilize above the middle band of the Bollinger Bands, the likelihood of a rebound increases; conversely, if it continues to hover below the moving averages, the bearish trend may persist.

Overall, the recent intense fluctuations in ETH reveal the fragile situation in the market under the combined risks of high leverage and macroeconomic uncertainties. In a volatile market, it is advisable for investors to maintain cautious operations, reasonably control positions, and manage risks effectively.

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