ETH Fluctuation: A Duet of Macroeconomic Uncertainty and Technical stop loss

⏰ Event Review

In the early hours of today, the ETH market experienced a dramatic fluctuation. The event was triggered by the Federal Reserve's announcement at 02:00 to maintain the federal funds rate in the range of 4.25%–4.5%. In their latest statement, they deliberately removed the phrase "economic uncertainty has diminished." Although this decision aligned with market expectations, some Federal Reserve officials (such as Waller and Bowman) publicly expressed support for interest rate cuts, leading to increased uncertainty regarding the future direction of policy. Along with the release of signals from Trump and the White House regarding related policies, the overall macroeconomic environment's uncertainty has intensified, causing many investors to adopt a cautious sentiment, which triggered technical stop-loss orders and a chain liquidation, resulting in a rapid decline in ETH prices.

🕒 Timeline

02:00: The Federal Reserve announced that it would maintain interest rates, while removing previous language that was favorable to the economic outlook, increasing market concerns about future policy changes.

02:30: ETH price reached a high (around $3813), market sentiment began to come under pressure, and long stop-loss orders were triggered one after another.

02:30～03:05: Under intense opposition between bulls and bears, the price of ETH quickly fell from around $3806 to $3670, a drop of 3.57%, resulting in a large number of long positions being liquidated.

03:30: The price has rebounded to $3722.99. Although there has been some rebound, the overall market volatility remains high, and investor sentiment is still cautious.

🔍 Reason Analysis

The recent sharp fluctuations in ETH can be attributed to two main factors:

Macroeconomic policy uncertainty The Federal Reserve removed the phrase "economic uncertainty has diminished" from its statement, reflecting policymakers' continued doubts about the future economic outlook. Additionally, some officials' support for interest rate cuts has led the market to speculate more about the Fed's subsequent actions. Overall, these factors have intensified the market's distrust of the economic outlook, prompting a decrease in risk appetite.

Technical Stop Loss and Liquidity Trigger Effect When the ETH price hovers at a high level, the long stop-loss orders distributed at key support levels in the market are quickly triggered. The intervention of high-frequency and algorithmic trading further amplifies the selling pressure, causing the price to suddenly drop in a short period. A large number of liquidation events and net outflows of major players also confirm the technical characteristics of this volatility.

📊 Technical Analysis

Based on the 45-minute candlestick data of Binance USDT perpetual contract ETH/USDT, we observed the following points:

Indicator Change

The KDJ indicator shows divergence, indicating that selling pressure is gradually increasing.

The trading volume of the 10-day moving average has increased by 47.51% compared to the previous period, and the trading volume of the 20-day moving average has risen by 42.14%, indicating a significant increase in trading activity in the short and medium term.

Moving Average Trend

The price is currently below the MA5, MA10, MA20, and MA50 moving averages, which are showing a bearish arrangement, indicating a weak trend.

In the EMA system, the price is also below EMA5, EMA10, EMA20, EMA50, and EMA120, indicating that it is in a downward channel in the short, medium, and long term.

K-line pattern

A doji candlestick pattern has appeared, reflecting market indecision, which may indicate a potential trend reversal.

The price is close to the lower bound of the technical indicators and is in an oversold state; at the same time, the TD price reversal signal is initially appearing, suggesting that a short-term local rebound may occur.

Market sentiment

In the last hour, the total order amount across the network reached approximately 20 million USD, of which 95% were long positions, indicating that a large number of long positions were forcibly liquidated near key support levels.

The net outflow of main funds is also about 20 million US dollars, indicating that institutions and large investors are cautious about the future market.

🔮 Market Outlook

Currently, although ETH has experienced a sharp decline, some technical signals indicate that the price may have entered the oversold area. In the short term, investors can focus on the support situation in the range of $3670 to $3723. Once the stop-loss orders from the decline are largely released, a local rebound may occur. The TD price reversal signal and the doji candlestick pattern both suggest that the market may be approaching an opportunity for short-term stabilization.

However, the uncertainty on the macro front has not yet been eliminated. Future policy directions of the Federal Reserve and changes in U.S. economic data may once again trigger market fluctuations. Investors need to comprehensively consider both fundamental and technical signals when intervening, exercise caution in their allocations, and manage position risks.

Overall, the drastic fluctuations of ETH this time are not only a direct reflection of macro policies and market pessimism but also the result of the cumulative effects of technical stop-losses and algorithmic trading. In the near future, the market may remain in a state of high volatility. It is advised that investors stay calm, closely monitor subsequent data and policy trends, and look for appropriate entry and exit opportunities.