Event Review 🔥

In the last trading session, starting from the opening at 23:00, the price of Bitcoin (BTC) plummeted from around $91,000 to about $86,000 in just 151 minutes, a drop of over 5%. This round of sharp decline not only shocked the entire crypto market but also led to a large number of high-leverage positions being liquidated, forcing some whale accounts to close their positions, creating a chain liquidation effect. Meanwhile, the U.S. government shutdown, macroeconomic data uncertainty, and Federal Reserve officials tightening expectations for interest rate cuts further intensified market risk aversion, leading to widespread selling of risk assets, with BTC, as a high-risk asset, naturally becoming a hard-hit area.

Timeline Review ⏰

• 23:00 – At the opening, the BTC price was around $91,000, and the market began to experience significant fluctuations. This coincided with the U.S. government data collection being hindered, making it impossible for the market to obtain clear economic data, while Federal Reserve officials warned of uncertainty regarding interest rate cuts in the short term.
• 23:00 to 01:30 – In just 151 minutes, BTC dropped from about $91,100 to approximately $86,200, a decline of about 5.3%. During this period, long and short leveraged positions frequently triggered liquidations, with major accounts (such as some "Maji Brother" accounts) being forced to liquidate, causing panic in the market.
• Around 01:00 – Trading platforms began to show that the liquidation amount for contracts in the last hour reached $100 million, with long positions accounting for about 43%, further pushing BTC down to near key support levels (some data showed as low as $86,665).
• 02:00 – Although there was a brief rebound, with the latest price rising to around $87,000, overall panic sentiment and liquidity risk remained unresolved.

Cause Analysis 💥

The recent BTC crash can be attributed to two main factors:

1. Macroeconomic Uncertainty and Shift in Monetary Policy

• The U.S. government shutdown has hindered the collection of some key economic data, exacerbating market uncertainty about the economic outlook.
• There are significant internal divisions within the Federal Reserve, with several officials taking a cautious stance on recent interest rate cuts, leaning instead towards maintaining or even tightening policies, which has rapidly increased market risk aversion.
• Investors, facing a dual backdrop of insufficient data and a shift in policy, have been withdrawing from high-risk assets, intensifying capital outflows and overall market selling pressure.

1. Internal Leverage Risks and Chain Liquidations

• A large number of traders used high leverage for long positions, and when prices hit key support levels, high-leverage positions faced forced liquidations, leading to a chain reaction of liquidations.
• The continuous liquidation of whale accounts intensified panic sentiment, further driving prices down.
• The nearly $100 million in liquidations in the contract market over the last hour and a net outflow of $100 million from major accounts indicate a sudden increase in internal liquidity risk, triggering a self-destructive selling cycle.

Technical Analysis 🔍

Based on Binance USDT perpetual contract 45-minute candlestick data, the current technical situation is as follows:

• Price Trend and Moving Average Arrangement

• The price is running along the lower Bollinger Band, approaching the oversold area.

• The current price is below the MA5, MA10, MA20, MA50, and EMA series moving averages, which are in a perfect bearish arrangement, indicating that the downward trend remains strong in the short to medium term.

• Indicator Signals

• The KDJ indicator is in an oversold state and is beginning to converge, which may signal a potential rebound in the short term;

• The RSI indicator also shows an oversold state, but in the overall downward trend, the rebound risk is limited.

• The MACD histogram has been decreasing continuously, indicating that selling pressure has not dissipated, and downward momentum remains strong.

• Trading Volume Dynamics

• The 10-day and 20-day moving averages show trading volume increasing by approximately 134% and 69%, respectively, indicating that recent market trading has been active, but mainly due to panic selling.

• Liquidations and Large Transactions

• In the last hour, the total liquidation amount across the network reached $50 million, with long position liquidations accounting for an astonishing 97%, highlighting the high leverage risk and market panic sentiment.

• A net outflow of $100 million from major accounts further confirms significant capital outflow, intensifying downward price pressure.

Market Outlook 🌅

The current market is in a state of high panic, with overall volatility increasing. In the short term, due to technical indicators showing oversold conditions, localized rebound signals may appear, but considering the macro environment and high leverage risks on-chain, the magnitude and sustainability of this rebound are limited. The risks in the future market mainly lie in the following points:

• Support Level Test

• The current key support level for BTC is around $87,000. If this level is breached, it may face a larger downward movement, with some analysts predicting risks of further declines to $86,000 or even lower.

• Liquidity and Liquidation Risks

• There are still many high-leverage long positions, and market sentiment remains in a state of panic, which could trigger a chain liquidation effect at any time, further exacerbating the decline.

• Macroeconomic Uncertainty

• The interruption of government data collection and the Federal Reserve's tightening expectations are unlikely to change in the short term, and the market continues to focus on subsequent official data releases and signals of policy shifts.

Overall, in the short term, it is advisable for investors to remain cautious and strictly control positions and risks. For traders with a higher risk appetite, attention can be paid to short-term rebound opportunities in the oversold areas of the technical indicators, but caution is needed regarding potential pullbacks that may lead to further consolidation. Long-term investors should consider market sentiment and macroeconomic fundamentals, gradually positioning themselves during localized oversold conditions while implementing risk control measures, waiting for the market to gradually restore rationality before making medium to long-term allocations.

— This crash reflects the impact of macro policies and data uncertainties, while also exposing the fragility of the market's internal high-leverage structure. In the midst of severe fluctuations, rationality and risk control are always more important than chasing highs and cutting losses.

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