Event Review 🔥

Recently, the ETH market experienced a round of intense fluctuations. Multiple reports revealed that a certain whale faced a liquidation of up to $700 million due to high leverage operations last night, instantly triggering market panic. Some traders questioned at 22:41, "Is ETH going to continue to drop?" indicating a shift towards pessimistic market sentiment. Subsequently, around 23:00, when the ETH price stabilized at about $2372 across major exchanges, it encountered strong selling pressure, triggering a chain liquidation. Within just 35 minutes, the price dropped from $2372 to around $2285, with a decline ranging from 3% to 3.67%, and then briefly recovered to about $2314.71 at 00:00. The entire process revealed the combined effects of leverage risk, liquidity crisis, and macro shocks.

Timeline ⏰

• 22:30 – News broke that a "whale faced a $700 million liquidation," leading to panic as high-leverage positions were liquidated.
• 22:41 – Some traders questioned, "Is ETH going to continue to drop?" indicating increased downward pressure on the market.
• 23:00 – When the ETH price was around $2372, a sudden influx of strong sell orders triggered a chain liquidation.
• 23:00～23:35 – The price rapidly declined to about $2285 (some data showed $2299) within a short time, with a drop of 3% to 3.67%, breaking below the $2300 mark for the first time.
• 00:00 – After significant volatility, the ETH price oscillated and recovered to about $2314.71, showing signs of a short-term rebound.

Cause Analysis 🧠

• Macroeconomic Policy Shock
  Recent uncertainties regarding U.S. tariff policies, partial government shutdowns, and other macroeconomic factors have shifted market sentiment from optimism to caution, leading to a rapid outflow of funds from risk assets.

• Surge in Leverage Trading Risks
  High-leverage positions were forced to liquidate during the intense fluctuations, creating a chain liquidation effect. Many trading platforms briefly experienced liquidity crises or API interruptions, preventing market makers from hedging risks in a timely manner, exacerbating market sell-offs.

• Insufficient Liquidity and Chain Effects
  Driven by large orders, market liquidity quickly dried up, allowing small amounts of capital to significantly lower prices, further triggering liquidations and panic selling.

Technical Analysis 📊

This technical analysis is based on Binance's ETH/USDT perpetual contract 45-minute candlestick data, focusing on the following aspects:

• Candlestick Patterns and Indicators

• The price is operating along the lower Bollinger Band, indicating a strong downward trend;

• The KDJ indicator shows divergence, suggesting that selling pressure continues to strengthen;

• A bullish engulfing pattern has appeared, with the second candlestick completely engulfed by the first, indicating a potential phase reversal in the market.

• Moving Average Trends

• The current price is below the MA5, MA10, MA20, and MA50, and also below the EMA5, EMA10, EMA20, EMA50, and EMA120, with all moving averages in a bearish arrangement;

• The slopes of EMA20 and EMA120 are -1.24% and -0.75%, respectively, indicating a clear downward trend in both the medium and long term.

• Oscillation Indicators

• The MACD histogram is continuously narrowing, with increasing downward momentum;

• The RSI is in the oversold region, suggesting a potential technical rebound in the short term;

• The TD price reversal signal gives an initial bullish indication, requiring close attention to subsequent trends.

• Volume Changes

• Trading volume has significantly increased, with a short-term growth of 56.53%, reflecting unusually active trading during market fluctuations;

• The 10-day and 20-day average volumes have increased by 74.30% and 44.03%, respectively, further validating the market's unusual activity during panic conditions.

Additionally, in the past hour, the total liquidation amount across the network reached $8 million, with long positions accounting for 71%, and a net outflow of approximately $10 million from major players, all pointing to a typical state of liquidity crisis and chain liquidation in the market.

Market Outlook 🔮

• Short-term Observation
  Although there has been a brief price recovery, considering that the RSI is in the oversold region and most moving averages are in a bearish state, there remains significant downside risk in the short term. Investors should pay attention to whether key support levels (such as around $2300) can hold to prevent further panic selling.

• Medium to Long-term Risks
  The uncertainties in the macroeconomic situation and the potential threats from high leverage risks in the market continue to pose significant hazards for ETH and other crypto assets in the future. Until liquidity gradually returns, the market may remain in a state of oscillation and adjustment.

• Strategy Recommendations
  For short-term traders, it is advisable to remain cautious, monitor changes in trading volume and key technical indicators, and consider entering positions in batches or setting stop-loss orders promptly; while medium to long-term investors should focus more on fundamental considerations, waiting for the macro environment and on-chain risks to gradually ease before opportunistically buying on dips. Additionally, keep an eye on market momentum and institutional position changes to adjust holding strategies in a timely manner to avoid sudden risks.

Overall, the recent volatility in the ETH market reflects a typical result of both macro shocks and technical liquidations. Although there are occasional reversal signals in technical indicators, the overall environment has not fully returned to rationality, and investors must operate cautiously and manage risks effectively.

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