ETH Plunge Storm: Multiple Trigger Factors Behind the Sharp Volatility

Event Review 📝

Recently, the ETH market has experienced a wave of intense volatility. Starting around 23:30 in the evening, capital flows shifted dramatically: from large-scale sell-offs by institutions and whales, to forced liquidations of leveraged accounts, and then to the breach of technical support levels, market sentiment quickly turned bearish. Some reports indicate that multiple large position adjustments, liquidation of some whales’ long positions, and the withdrawal of liquid funds collectively drove the rapid decline in ETH prices. Meanwhile, uncertainty in macroeconomic data and expectations of tightening liquidity have cast further shadows over the market.

Timeline ⏰

• 23:30: Initial selling pressure appeared in the market, with some funds actively selling. FG Nexus sold over 10,000 ETH to raise funds for buybacks, and contract liquidations reached as high as $185 million, indicating rising risk.
• 23:44: A major whale, in order to avoid liquidation, chose to close out about 18,517 ETH, resulting in a loss of approximately $25.29 million, clearly signaling selling pressure.
• 23:57: The ETH market saw a double sharp drop—within 11 minutes, the price quickly fell from $2979 to $2909 (a drop of 2.37%), then slid from $2922 to $2878 (a drop of 1.51%), triggering market panic.
• 00:14: Trading data showed that the OKX-ETH/USDT price broke through a key support level, falling to $2893.97, confirming the loss of technical support.
• 00:20: Another whale (address 0x4ed0) adjusted positions due to circular lending, with nearly 18,518 ETH liquidated at an average of $3046 to repay debts, further intensifying downward pressure in the market.
• 00:24: As technical sell signals continued to be triggered, ETH broke below the $2900 mark, buying interest weakened sharply, and market sentiment deteriorated further.
• 00:26–00:27: High-leverage trader “Brother Machi” had his 25x long position partially liquidated, with cumulative losses exceeding $20 million, once again exposing the risks of excessive leverage.
• 00:36: The market temporarily stabilized, with the latest ETH transaction price falling back to around $2882.46, but the violent fluctuations had already cast a heavy shadow over the market.

Reason Analysis 🔍

The sharp market volatility was not accidental, mainly stemming from the following two core reasons:

1. Macroeconomic and Policy Uncertainty

• Adjustments to US government and employment data, including the cancellation of the October employment report, have raised doubts about the authenticity of economic data and the future direction of policy.
• Minutes from the Federal Reserve and statements from some officials have lowered expectations for rate cuts, inflation remains stubborn, and tightening of funds in some non-traditional asset markets has led to tighter liquidity and growing risk aversion in the market.

1. Exit of Institutional and Large-Scale Funds and Technical Selling

• Large market sell orders have appeared frequently, with whales and institutions successively transferring large positions to platforms or directly closing them, triggering automatic liquidations and secondary selling pressure.
• Leveraged trading accounts have been frequently liquidated (such as “Brother Machi’s” 25x position), further intensifying the market downturn and causing technical support levels to be repeatedly breached.
• ETF and net outflow data from some institutions also reflect the increasingly severe overall selling pressure in the market, with funds continuously flowing out and accelerating the downward process.

Technical Analysis 📊

Based on the Binance USDT perpetual contract 45-minute candlestick chart data, the current ETH market is showing clear bearish signals from a technical perspective:

• RSI Indicator: Has fallen below the 30 range, entering oversold territory, indicating that while buyers have attempted a rebound in the short term, selling pressure remains strong.
• Bollinger Bands: The transaction price is running along the lower band, indicating the market is in a state of panic selling, with a strong signal.
• Moving Averages: The price is below the MA5, MA10, MA20, and MA50, and the moving averages are arranged in a bearish pattern. The EMA series also shows a strong downward trend, confirming a strong short-term bearish sentiment in the market.
• Volume Analysis: Trading volume has surged (107.84% higher than the average in the short term), indicating a large amount of capital is eager to exit amid panic; meanwhile, the main net outflow of $100 million also confirms the continuous withdrawal of institutional funds.
• Other Technical Indicators: The J value is extremely oversold, OBV has broken below previous lows, and the continuous appearance of inverted hammer and three black crows candlestick patterns all suggest a possible short-term reversal opportunity, but only if buyers can quickly step in to restore sentiment.

Market Outlook 🚀

In the short term, ETH prices may seek a rebound in the oversold area, but market sentiment remains fragile. Several major risk factors persist:

• Macroeconomic Trends: If future US employment data and Federal Reserve policy signals do not show clear improvement, liquidity will remain tight and ETH may continue to be under pressure.
• Capital Dynamics: Whether large holders and institutional funds can buy on dips, and whether effective stabilization can occur after leveraged liquidations, still depends on capital flows.
• Technical Support: If the price can hold the "$2880" range and show divergence rebound signals in technical indicators, there may be a short-term local improvement, but if key support levels continue to be breached, risks will increase further.

Investors should remain highly vigilant, pay attention to further changes in policy and global economic data, and combine technical analysis to look for opportunities to buy on dips. Given the current extreme volatility and sentiment, risk control should be more cautious, positions should be allocated reasonably, and chasing highs or heavy positions during extreme market sentiment should be avoided.

Overall, after experiencing violent fluctuations, ETH may see a technical rebound in the short term, but overall risk remains high. Investors are advised to remain on the sidelines and continue to monitor changes in market depth and macro news developments.