Event Review 🚀

During the trading session on October 12, ETH experienced a thrilling price surge. The market began to fluctuate around 22:00 due to the risk of liquidation across the network and sudden changes in liquidity, with ETH prices hovering around $3806. However, within just over an hour, accompanied by a shift in macroeconomic expectations and a chain reaction of liquidations in the derivatives market, the price skyrocketed, briefly retreating to $4042.87 at 23:15, with a cumulative increase of 6.22%. This wave of market activity not only showcased a sharp turn in market sentiment but also exposed multiple signals of internal risks colliding with external positives.

Timeline ⏰

• 22:00: Market fluctuations suddenly arise. As ETH prices are around $3806, the pressure from liquidations in the derivatives market surges, initiating the "Network-wide Liquidation Rescue Plan," indicating a rapid rise in liquidity risk.
• 22:30: Macroeconomic signals warm up. The probability of a Federal Reserve interest rate cut skyrockets to 98.3%, with the main capital transaction volume reaching $81.88 million, leading the market to anticipate a more accommodative monetary policy.
• 22:46: ETH price breaks through the $3900 mark, showing active buying interest and a preliminary recovery of market confidence.
• 22:55: Price approaches the $4000 threshold, with buying power continuing to accumulate, laying the foundation for further upward movement.
• 23:00: The critical $4000 level stabilizes, further boosting market sentiment.
• 23:15: After reaching a peak, the market slightly retraces, with ETH prices briefly climbing to $4045 before falling back to $4042.87, with the phase of intense volatility essentially converging.

Reason Analysis 🔍

The recent volatility in ETH is primarily driven by two core factors:

1. Macroeconomic and Policy Expectations
   The global economic situation and policy direction have had a direct impact on market psychology. The recent surge in the probability of a Federal Reserve interest rate cut, the deadlock in government funding, and other external uncertainties have led to a rapid shift of funds from safe-haven assets to risk assets. The market anticipates that a more accommodative liquidity environment will arrive soon, prompting investors to increase their positions in digital assets like ETH, triggering a buying frenzy.

2. Chain Reactions in the Derivatives Market
   Within the derivatives market, significant liquidations of perpetual contracts triggered a chain reaction. In less than an hour, the total liquidation amount across the network reached $30 million, with short positions accounting for as much as 94%, while net inflows of main capital were approximately $300 million. Such a large-scale forced liquidation and repositioning operation quickly released a substantial amount of bottom-fishing buying, propelling ETH prices to rebound significantly from lower levels.

Technical Analysis 🔧

Based on the 45-minute candlestick data of ETH/USDT perpetual contracts on Binance, this market movement exhibits strong technical buying signals while also indicating some overbought risks:

• Candlestick Patterns: The chart shows a continuous appearance of the "Three White Soldiers" pattern (three or more consecutive bullish candles), indicating sustained buying activity pushing prices higher.
• Moving Average Trends: ETH prices are currently above multiple moving averages such as MA5, MA10, MA20, and MA50, with the moving averages in a bullish arrangement. Additionally, the EMA5/10/20/50/120 moving averages also show a strong upward trend.
• Oscillation Indicators: The J value is in the overbought zone, and the RSI indicator is also high, suggesting potential short-term retracement risks; however, the divergence in the KDJ indicator indicates an increase in trend strength, making it suitable for short-term chasing of gains.
• Volume Analysis: Recent trading volume surged by 166.86%, significantly exceeding the 10-day and 20-day average volumes, with the OBV indicator breaking through previous highs, further confirming the strong entry of market buying.
• Other Technical Details: The steep rise of EMA20 and EMA24 (with slopes of 1.02% and 0.86%, respectively) reflects ample upward momentum, but the price nearing the upper band also signals the risk of some short-term profit-taking.

Market Outlook 🌅

In the short term, due to technical indicators showing certain overbought conditions, coupled with unusually active market trading volume, ETH prices may experience fluctuations and retracements at high levels. Investors should be cautious of short-term adjustment risks triggered by profit-taking.

In the medium to long term, if macroeconomic easing policies continue to release positive news, along with institutional and whale capital consistently entering the market, ETH is expected to maintain an upward trend. However, the instability of the derivatives market and the potential for further liquidations remind everyone to maintain risk control while chasing gains, reasonably allocate positions, and avoid being caught off guard by market volatility.

Overall, the recent surge in ETH prices is both an inevitable response to favorable market policies and shifts in capital expectations, as well as an exposure of the operational risks within the derivatives market. In the future, while enjoying market dividends, investors should closely monitor technical indicators and macro dynamics, timely adjust trading strategies, and maintain rationality and caution.

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