ETH market experiences severe fluctuation: Leverage risk tears apart the market, technical signals map a turning point.

Event Review 📜

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

Timeline ⏰

03:30: The price of ETH is about $2737. High leverage positions begin to expose risks, triggering automatic stop-losses and programmatic trading, laying the groundwork for a chain of liquidations.

03:49: Key support level (around $2700) has been breached, market panic intensifies, further triggering liquidation effects.

04:55: The price plummeted to $2614, with a cumulative drop of 4.48%, as a wave of liquidations and panic selling emerged.

05:20: The market has slightly stabilized after some selling pressure was released, with prices climbing to $2650.64, but overall it remains at a low level, showing a clear fluctuation pattern.

Reason Analysis 🔍

Leverage risk and cascading liquidation effect Currently, many institutions are adopting short-selling strategies with leverage as high as 25 times. After the price reaches key support levels, automatic stop-loss orders are triggered one after another, leading to a wave of algorithmic trading and creating a chain reaction of liquidations, which exacerbates the downward price movement.

Macroeconomic and policy uncertainty Recent U.S. economic data and policy expectations have been volatile, coupled with political controversy and high-level turmoil, which has shifted funds to safe-haven assets. The outflow of funds from high-risk digital assets, coupled with uncertain expectations for the Federal Reserve and non-farm payrolls data, combined to drive the sharp volatility of 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 and is in a relatively weak support area; the KDJ indicator shows an oversold state, and there may be signs of a technical rebound in the short term, but it is still necessary to be wary of bottom traps.

Volume Dynamics: Trading volume increased by 44.91%, while the 10-day and 20-day averages rose by 32.93% and 35.77% respectively, indicating an increase in market activity; however, significant volatility is also accompanied by the risk of large orders.

Moving Average System: The short-term moving averages (MA5, MA10, MA20, MA50) are all positioned above the price, and the moving averages are in a bearish arrangement; at the same time, the EMA series (EMA5, EMA10, EMA20, EMA50, EMA120) also shows a downward trend, and the MACD histogram continues to shrink, indicating that the downward momentum remains strong.

Reversal signal: TD price reversal is beginning to appear, laying the seeds for a potential trend reversal, but the overall bearish signals remain evident. Close attention is needed in the short term to monitor the situation of support reconstruction.

Market Outlook 🔮

Although ETH has shown some signs of stabilization after experiencing a drastic sell-off, the overall market sentiment remains fragile, and the future trend will depend on the following factors:

Support and Moving Average Reconstruction: If the price can gain effective support at a key low (around $2650) and return above the middle band of the Bollinger Bands and the moving average system, a short-term structural rebound may occur; otherwise, there is still a risk of further decline.

The leverage clearing effect diminishes: the market needs time to digest the negative impacts brought by liquidation events. If high-leverage positions are effectively cleared and panic sentiment subsides, it will help stabilize market sentiment.

External Economic and Policy Environment: The latest developments in the U.S. macroeconomy and policy will continue to influence the flow of funds into digital assets in the short to medium term. Investors should closely monitor non-farm data, Federal Reserve movements, and political risk trends, and proceed with caution in their allocations.

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 their positions, and maintaining sensitivity to macro policies and market fundamentals to respond in a timely manner.