Event Review ⚡
Recently, the Ethereum market experienced a dramatic fluctuation. From significant capital transfers to massive position liquidations, multiple factors intertwined, causing the ETH price to plummet sharply in a short period. The market saw capital flows, frequent liquidation events, and some well-known accounts being forced to stop loss and close positions, all of which rapidly shifted market sentiment and further drove prices downward. This unusual volatility not only reflects the chain liquidation effect brought by high-leverage trading but also brings renewed attention to the impact of macroeconomic policy uncertainty on the crypto asset market.
Timeline ⏰
- 23:11: Significant capital movements appeared in the market, with a whale account dispersing approximately $1.8 billion worth of ETH into multiple wallets; meanwhile, cumulative floating losses of long positions in ETH, BTC, and SOL on Hyperliquid exceeded $37 million, sparking concerns over whale position adjustments.
- 23:28: The supply of Ethereum on exchanges dropped to a multi-year low, reflecting increased trader caution and reduced short-term selling pressure, with liquidity signals particularly noteworthy.
- 23:31: A well-known account triggered a stop loss due to a market rebound, closing approximately 25,000 ETH short positions and incurring a loss of about $2.1 million, highlighting the risk of chain liquidations faced by high-leverage positions.
- 23:41: After recording a price of $2,983, ETH quickly declined, with selling pressure surging.
- 23:41 to 23:53: In just 12 minutes, ETH price plunged from $2,983 to $2,901, a drop of 2.75%, demonstrating intense selling pressure.
- 23:41 to 00:25: Another set of data showed the price further dropping from $2,905 to $2,844, with a cumulative decline of about 2.11%.
- 00:26: After the sharp volatility, ETH price slightly rebounded to $2,854.63, and the market began to gradually enter a consolidation phase.
Cause Analysis 🔍
Macroeconomic and Policy Uncertainty
Recently, consecutive interest rate cuts by the Federal Reserve and related policy statements, coupled with remarks from Trump and other senior officials on interest rates and monetary policy, have made the global liquidity outlook highly uncertain. This external environment uncertainty has led to reduced market risk appetite and lower tolerance for high-risk assets, thereby intensifying price volatility.Chain Liquidation Effect of High-Leverage Trading Positions
As some institutions and whale accounts use high-leverage trading, any weakening in market sentiment triggers a large number of stop-loss and liquidation actions. In this round, multiple accounts were quickly forced to close positions due to a brief rebound, creating a chain effect that further amplified selling pressure. Meanwhile, the total liquidation scale across the network reached $10 million, with long positions accounting for 93%, marking the vulnerability of the leveraged market.Market Liquidity Changes and Capital Transfers
The dispersal of massive funds and the exchange supply hitting a multi-year low indirectly indicate that some capital is exiting existing positions to cope with market uncertainty. This liquidity tightening also fueled subsequent chain liquidations and price crashes.
Technical Analysis 📈
Based on Binance USDT perpetual contract ETH/USDT 45-minute candlestick chart data, the current technical outlook presents multiple bearish signals:
- Moving Average Death Cross: The short-term EMA5 crosses below EMA10, and EMA10 crosses below EMA20, all indicating a short- to mid-term bearish trend. The price is currently below EMA5, EMA10, EMA20, and even longer-term moving averages, showing that bears are in full control.
- MACD Indicator: The MACD line forms a death cross below the zero axis, further confirming a sell signal; meanwhile, the mid-term trend is also downward.
- RSI Indicator: RSI has fallen below the 50 midline, indicating insufficient market momentum and dominance of bearish forces.
- 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 fallen below 0, suggesting the market may be entering an oversold area. However, the current oversold state shows more characteristics of panic selling rather than a stable rebound.
- Unusual Trading Volume: During the price decline, trading volume surged by 312.45%, indicating that panic selling and institutional chain liquidations dominated in a short period. When trading volume continues to expand and both short- and long-term average volumes show significant increases, market activity is enhanced, but it more so reflects rapid selling and capital withdrawal.
Market Outlook 🌅
Although the ETH market has experienced a sharp decline, there are signs of some recovery after the extreme volatility. Technical indicators suggest the market may be in an oversold zone, and if strong buying emerges, a short-term rebound is possible; however, in the medium to long term, uncertainties in the macroeconomic environment and high-leverage positions remain, and market sentiment may continue to be dragged down.
Investors should focus on the following key points:
- Closely monitor macro policy dynamics and liquidity changes to assess future risks;
- Pay attention to changes in exchange supply and large capital flows, as these are important signals for subsequent market trends;
- On the technical side, if the price can break above and hold the middle band of the Bollinger Bands, the probability of a rebound increases; conversely, if it continues to hover below the moving averages, the bearish trend may persist.
Overall, this sharp fluctuation in ETH reveals the fragile situation of the market under the combined risks of high leverage and macroeconomic uncertainty. In a volatile market, investors are advised to operate cautiously, manage positions reasonably, and implement sound risk management.
