Event Review 📜

Recently, the price of ETH experienced significant fluctuations in a very short period. From signs of bottom fishing at low levels to a fierce influx of leveraged long positions, market sentiment quickly shifted from extreme fear to short-term chasing of gains.

• Around 22:24, signs of a market bottom began to emerge, with many whales and well-known gamblers switching from short to long positions. A typical case is address 0x7B7b, which opened a long position of about 25,000 ETH using 25x leverage, with a total position value of nearly $78.63 million. Meanwhile, other whales were accumulating positions around $3,166, laying the groundwork for subsequent market support.
• Subsequently, funds rapidly flowed in, and the tug-of-war between long and short positions caused the ETH price to soar from about $3,106 to $3,216 in just 16 minutes, an increase of approximately 3.51%. After that, from 22:30 to 22:50, the price further rose from $3,133 to $3,220, indicating a strong buying force.
• After the initial rapid surge, the price adjusted to $3,183.09 at 23:15, with the market oscillating between technical rebounds and profit-taking.

Timeline ⏰

• 22:24 – The market bottom begins to show, with some institutions and whales initiating bottom fishing actions, and well-known gamblers switching from short to long positions and significantly increasing their holdings.
• 22:30 – The ETH price rapidly climbs from about $3,106 to $3,216, with the effects of leveraged trading clearly boosting the short-term market.
• 22:30 to 22:50 – The price continues to rise, from $3,133 to $3,220, showing a strong willingness for funds to enter the market.
• 23:15 – After a rapid increase, the market experiences a pullback, with the price reported at $3,183.09, reflecting short-term fluctuations indicative of technical overbought risks and profit-taking expectations.

Reason Analysis 🔍

Two key factors drove the recent volatility in the ETH market:

1. Technical Oversold and Leverage Effect

• In the context of previous market panic and shrinking trading volume, there was a clear divergence between long and short positions. As some funds concentrated on bottom fishing at low levels, traders using high leverage quickly pushed prices up, creating an overbought state in the market in a short time. The leverage effect further amplified the price increase but also increased the risk during pullbacks.

1. Macroeconomic Policy and Sudden Shift in Market Sentiment

• The news of the end of the U.S. government shutdown and reopening, along with discussions by Federal Reserve officials regarding interest rate cuts and liquidity policies, shifted market expectations from risk aversion to risk asset allocation. In an atmosphere of extreme fear, sudden policy changes and improved economic data signals quickly altered the flow of funds, propelling a significant rebound in digital assets like ETH.

Technical Analysis 📈

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

• Moving Average System
• Short-term Signals: EMA5 crosses above EMA10, forming a golden cross, indicating an increase in buying power in the short term; however, the J indicator is already in an extremely overbought state, posing a high risk of pullback.
• Medium to Long-term Trends: Although trading volume has increased by 24.86% recently, and short-term moving averages are in a bullish arrangement, MA5, MA10, and MA20 are in a bearish arrangement, with prices below the EMA20/50/120 moving averages, indicating that the long-term downtrend has not fundamentally changed.
• Trading Volume and Liquidation Situation
• In the past hour, approximately $9 million in liquidations occurred across the network, with short positions accounting for 70%. The net inflow of funds from major players was about $30 million, indicating that some institutions are still capturing short-term opportunities through technical rebounds.
• Support and Resistance
• The current price is receiving technical support near MA20, but the long-term moving average system (EMA24/52 and longer period moving averages) tends to decline. If funds are withdrawn or profit-taking occurs significantly, the market may turn to a downward trend again.

Market Outlook 🔮

In the short term, ETH is expected to continue consolidating after a technical rebound, and traders should pay attention to the following aspects:

• Short-term Operations: If the price can stabilize near MA20 or form a new support area, it may provide flexibility for subsequent small upward movements. However, in the short term, caution is needed regarding the overbought J value and the violent fluctuations brought by leveraged long positions, and it is advisable to maintain risk control and gradually accumulate positions at lower levels.
• Medium to Long-term Trends: Although recent large-scale purchases by institutions convey a certain bullish signal, the long-term moving average layout shows that the market is overall in a downtrend. Continuous fund flows and changes in macroeconomic policies will be important driving factors for the future market.
• Risk Warning: In the context of high leverage and technical overbought conditions, if market sentiment changes or sudden negative macroeconomic news appears, it may trigger a rapid pullback. Investors should make rational judgments and avoid full-position operations during periods of high volatility.

In summary, the recent significant fluctuations in ETH are both an immediate reflection of technical overselling and leverage effects, as well as a result of changes in macroeconomic policy expectations leading to structural shifts in fund flows. In such a volatile market environment, cautious operations and timely adjustments to positions are particularly important.

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