🔥 Event Review

Recently, the Ethereum market has experienced a round of intense fluctuations, with market sentiment shifting from panic to overselling. From the fierce remarks made by senior U.S. government officials during hearings to increasing policy uncertainty and continuous liquidations of leveraged positions, the overall atmosphere has become extremely pessimistic. Strong reversal signals appeared during trading, forcing investors to close positions, which led to a rapid decline in prices towards key support zones. Meanwhile, the movements of institutional funds and large whales have also caused significant changes in the market, further exacerbating risks and liquidity issues.

⏰ Timeline

• 02:56 – Intense debates on crypto regulation and the structure of the digital asset market during a Senate Banking Committee hearing raised concerns about future policy directions.
• 03:00 – At market open, Ethereum was trading at around $1950, showing initial signs of high leverage concentration and liquidity tightening.
• 03:00～04:51 – Within 111 minutes, ETH plummeted from about $1952 to $1823, a drop of 6.62%, demonstrating the rapid transmission of chain liquidation effects.
• 03:10 – Reports emerged that BitMine hit a 7-month low, showing that Ethereum had accumulated paper losses of up to $800 million, intensifying panic across the market.
• 04:16 – ETH price fell below the key psychological level of $1900, and after breaking the support level, market shorts accelerated their liquidation.
• 06:15 – By this time, ETH price had dropped from about $1949 to $1813 (a decline of nearly 6.94%), followed by a brief rebound to $1837, indicating market consolidation after panic liquidation.

📊 Cause Analysis

The recent market volatility can be attributed to two core factors:

1. Increased Macroeconomic and Policy Uncertainty

• Intense debates within government departments regarding crypto asset regulation and calls for legislation on the structure of the digital asset market have raised investor concerns about future monetary policy directions.
• Unclear remarks from senior officials and uncertainty regarding expectations for Federal Reserve interest rate cuts have further exacerbated the outflow of funds from risk assets, dragging down the crypto market.

1. High Leverage Positions and Liquidity Tightening

• A large number of high-leverage positions in the market were forced to close during the price decline, creating a chain liquidation effect.
• Net outflows from ETF funds, options liquidations, and panic selling by retail and institutional investors have further deteriorated market liquidity, causing severe fluctuations once prices break support levels.

📈 Technical Analysis (Based on ETH/USDT Binance USDT Perpetual 45-Minute K-Line)

From the 45-minute K-line data, the current technical indicators show the following characteristics:

• Price Movement and Bollinger Bands:
  Prices are running along the lower Bollinger Band, overall in a weak trend, making it easy to trigger oversold rebound signals.

• KDJ and RSI Indicators:

• The KDJ indicator is currently in the oversold zone, and the values are beginning to converge, suggesting a possible rebound in the short term.

• The RSI also shows an oversold state, indicating a potential short-term reversal in the market.

• Moving Average System and Trend Lines:

• ETH price is currently below the MA5, MA10, MA20, MA50, and EMA5/10/20/50/120 moving averages, with all moving averages showing a clear bearish arrangement.

• The slopes of EMA20 and EMA120 are -2.69% and -1.03%, respectively, indicating that both medium-term and long-term downward momentum remains strong.

• Additionally, prices are below EMA24/EMA52, both of which are in a downward trend (EMA24 slope is approximately -2.48%, EMA52 is about -1.65%), further reinforcing the downward trend.

• Trading Volume and OBV:

• Trading volume has decreased by 33.35% in the recent period. Although the 10-day and 20-day moving averages' trading volumes have increased by 14.28% and 12.83%, respectively, the total volume remains low, indicating a decline in market activity.

• The OBV indicator continues to decline, reflecting that selling pressure dominates, further supporting the downward market scenario.

• Pattern Indicators:

• In terms of K-line patterns, a "Black Three Soldiers" structure (a series of consecutive bearish candles, each closing lower than the previous one) has emerged, which is a strong bearish signal.

• Although the TD Sequential bullish setup (count reaching 9) suggests a potential reversal, the overall divergence between bulls and bears is evident, and the strength of any short-term rebound remains uncertain.

🔮 Market Outlook

In the current context of intense volatility, Ethereum may experience some rebound due to oversold conditions in the short term, but overall downward risks still exist. Looking ahead:

• Short-term Possibilities:
  With KDJ and RSI in the oversold zone, coupled with some technical indicators showing convergence signals, the market may see a brief reversal after some release of panic sentiment. However, constrained by the moving average system and low trading volume, the strength of the rebound may be limited.

• Medium to Long-term Risks:
  Macroeconomic policy uncertainty and the subsequent liquidation effects caused by high leverage may still lead to further price declines. If prices cannot effectively stabilize above key support levels (such as around $1900), they may further drop to lower ranges.

• Investment Strategy Recommendations:
  For short to medium-term traders, closely monitor the trends within the 45-minute cycle, paying special attention to KDJ and RSI reversal signals as well as the support performance of key moving averages. Maintain caution, set reasonable stop-losses, and avoid greater losses due to market chain liquidations. Long-term investors should focus on macro policy and liquidity signals to take advantage of dips when market sentiment stabilizes.

Overall, the current Ethereum market is exhibiting intense volatility under the dual pressures of macro uncertainty and internal liquidation. For investors, it is essential to be wary of the uncertainties of short-term market reversals while also paying attention to medium to long-term fundamental changes to make rational decisions and manage risks.

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