Event Review 📜

Recently, the ETH market experienced a severe storm. Starting from $2737 at 03:30, high-leverage trading and automatic stop-loss orders were triggered one after another, leading to a chain reaction of liquidations that drastically worsened market sentiment. The price plummeted to $2614 by 04:55, with a cumulative drop of over 4%. Although the market slightly stabilized by 05:20, with the price rising to $2650.64, the overall low-level fluctuations and intense volatility reflected the deep uncertainty in the market.

Timeline ⏰

• 03:30: ETH price around $2737. High-leverage positions began to expose risks, triggering automatic stop-loss and programmatic trading, laying the groundwork for a chain liquidation effect.
• 03:49: The key support level (around $2700) was breached, intensifying market panic and further triggering liquidation effects.
• 04:55: The price sharply dropped to $2614, with a cumulative decline of 4.48%, showcasing waves of liquidations and panic selling.
• 05:20: The market slightly stabilized after some selling pressure was released, with the price climbing to $2650.64, but overall remained low, showing a clear oscillation pattern.

Cause Analysis 🔍

1. Leverage Risk and Chain Liquidation Effect
   Many institutions are currently employing short strategies with leverage as high as 25 times. After the price hit key support levels, automatic stop-loss orders were triggered, leading to a surge in programmatic trading, which formed a chain liquidation effect and exacerbated the downward price movement.

2. Macroeconomic and Policy Uncertainty
   Recent U.S. economic data and policy expectations have been fluctuating, coupled with controversies in the political arena and turmoil at high levels, causing market funds to shift towards safe-haven assets. The outflow of funds from high-risk digital assets, along with uncertainties regarding the Federal Reserve and non-farm data, collectively drove the sharp volatility in ETH prices.

Technical Analysis 📊

Based on Binance USDT perpetual contract ETH/USDT 45-minute candlestick data, the current market shows the following characteristics:

• Price Trend: The current price is running along the lower Bollinger Band, in a relatively weak support area; the KDJ indicator shows an oversold state, indicating potential technical rebound signs in the short term, but caution is needed for bottom traps.
• Volume Dynamics: Trading volume increased by 44.91%, while the 10-day and 20-day average volumes rose by 32.93% and 35.77%, respectively, indicating increased market activity, but significant volatility also comes with liquidation risks.
• Moving Average System: Short-term moving averages (MA5, MA10, MA20, MA50) are all above the price, showing a bearish arrangement; simultaneously, the EMA series (EMA5, EMA10, EMA20, EMA50, EMA120) also shows a downward trend, with the MACD histogram continuously shrinking, indicating that the downward momentum remains strong.
• Reversal Signals: TD price reversal signals are beginning to appear, planting the seeds for a potential trend reversal, but overall bearish signals remain evident, requiring close attention to the reconstruction of support in the short term.

Market Outlook 🔮

Although ETH has shown some signs of halting the sharp sell-off, overall market sentiment remains fragile, and future trends will depend on the following aspects:

• Support and Moving Average Reconstruction: If the price can gain effective support around the key low (near $2650) and return above the middle Bollinger Band and moving average system, a short-term structural rebound may occur; otherwise, the risk of further declines remains.
• Leverage Liquidation Effect Diminishing: The market needs time to digest the negative impacts of the liquidation events; if high-leverage positions are effectively cleared and panic sentiment recedes, it will help stabilize market sentiment.
• External Economic and Policy Environment: The latest developments in the U.S. macroeconomy and policies will continue to influence the flow of funds in digital assets in the medium to short term. Investors should closely monitor non-farm data, Federal Reserve movements, and political risk trends, exercising caution in their strategies.

Overall, ETH is currently experiencing significant volatility, with technical indicators and market sentiment diverging. It is recommended that investors pay attention to short-term technical rebound signals while also focusing on risk management, reasonably controlling positions, and maintaining sensitivity to macro policies and market fundamentals for timely responses.

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