Event Review 🔥

Last night, the price of ETH experienced a sharp decline. The market started at around $3577 at 22:10 and, within just a few hours, due to the combination of policy uncertainty and the effects of high-leverage trading, the price fell sharply. Investor sentiment changed drastically, with some institutions and whales being forced to liquidate their positions quickly, leading to a panic sell-off across the market.

Timeline ⏱️

• 22:10
  The price of ETH was around $3577–$3580, at which point it began to trigger severe fluctuations. Under the influence of macro policy differences and uncertainties regarding regulatory expectations, high-leverage positions gradually experienced strong liquidation effects.

• Around 23:51
  After a rapid drop of 101 minutes, the price of ETH fell to about $3432, a decrease of approximately 4.15%. At this time, the chain reaction of long position liquidations became evident, exacerbating market selling pressure.

• 00:00
  The price of ETH further dipped to around $3370, with a cumulative decline of 5.79%. Large liquidations and institutional withdrawals caused market liquidity to plummet, leading to intense selling.

• 00:15
  The market saw a brief rebound, with the price of ETH rising to about $3394.76, but the overall downward trend remained unchanged, indicating that although there was an attempt to buy in, it was insufficient to reverse the decline.

Reason Analysis 🔍

The recent sharp decline in ETH prices was primarily triggered by two core reasons:

1. Macroeconomic Policy and Regulatory Uncertainty

• The U.S. government shutdown, expectations of interest rate cuts, and inconsistent voices regarding future debt and liquidity management have led to doubts about the direction of Federal Reserve policies.
• Regulatory agencies are exploring the classification of crypto assets and an overall regulatory framework, with ongoing policy rumors suppressing market confidence.

1. High-Leverage Trading and Liquidation Effects

• Long traders overly relied on high-leverage operations, leading to rapid triggering of liquidations and chain reactions when prices fell.
• In the past hour, the total amount of long position liquidations across the network reached approximately $20 million, with large liquidation orders and rapid institutional withdrawals causing liquidity to sharply decrease, intensifying downward pressure on prices.

Technical Analysis 📊

Based on the 45-minute K-line data of Binance's USDT perpetual contract for the ETH/USDT trading pair, technical indicators show that the market is in a clear downward trend:

• Moving Averages and Crossovers:
• EMA5 crossed below EMA10, forming a short-term death cross; EMA50 also crossed below EMA120, indicating a long-term downward trend.
• Oscillation Indicators:
• MACD showed a golden cross turning into a death cross, and the %B indicator fell below 0.2, indicating that prices are approaching the lower band and showing signs of being oversold;
• KDJ indicators are diverging, with the J value in an extremely oversold state, suggesting a potential technical rebound in the short term, but overall selling pressure remains evident.
• Volume-Price Relationship:
• Although trading volume surged by 187.75%, prices continued to decline, indicating that panic selling is accelerating.
• The OBV indicator fell below previous lows, further confirming the dominance of selling pressure.
• K-line Patterns:
• Continuous bearish candles (the "Three Black Crows" pattern) appeared, with each K-line closing lower than the previous one, indicating strong bearish sentiment in the market.

Market Outlook 🔮

From the current technical and macro fundamental perspectives:

• Short-term Advice:
• Although some oversold indicators suggest a buying rebound opportunity, the overall downward trend remains solid. Investors should be cautious of potential further liquidations following high-leverage liquidations and are advised to control their positions and be mindful of risk exposure.
• Medium to Long-term Trend:
• If the direction of macro policies becomes clearer and market risk appetite recovers, it may attract some funds to buy on dips. However, before regulatory adjustments and policy uncertainties are resolved, short-term stabilization signals for ETH remain weak.
• Technical Indicators:
• Pay attention to key support levels, such as oversold areas and historical lows; further changes in trading volume will also provide clues for trend reversals.

Overall, the recent volatility of ETH is more a result of excessive leverage operations and the combined effects of policy expectations. For risk-averse investors, maintaining caution and strategically buying on dips may be wiser; while long-term investors should focus on policy trends and institutional behaviors to wait for opportunities to accumulate after market stabilization.

In this storm of regulatory fog and high leverage, the future trajectory of ETH remains uncertain, and investors must adjust according to their risk tolerance and operate rationally.

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