Event Review 🚀
During the trading session on October 12, ETH experienced a thrilling price surge. Around 22:00, the market entered a period of volatility due to the risk of mass liquidations across the network and a sudden change in liquidity, with ETH prices hovering around $3,806. However, in just over an hour, driven by a shift in macroeconomic expectations and a chain reaction of liquidations in the derivatives market, the price soared, briefly pulling back to $4,042.87 at 23:15, with a cumulative increase of 6.22%. This rally not only showcased the sharp turnaround in market sentiment but also exposed multiple signals from the collision of internal risks and external positive factors.
Timeline ⏰
- 22:00: Market volatility suddenly intensified. When ETH was around $3,806, liquidation pressure in the derivatives market surged, triggering a "network-wide liquidation rescue plan," indicating a rapid rise in liquidity risk.
- 22:30: Macroeconomic signals improved. The probability of a Federal Reserve rate cut soared to 98.3%, with main funds trading volume reaching $81.88 million, and the market began to anticipate a more accommodative monetary policy.
- 22:46: ETH price broke through the $3,900 mark, showing active buying and an initial recovery in market confidence.
- 22:55: Price approached the key $4,000 level, with buying power continuing to accumulate, laying the foundation for further upward movement.
- 23:00: The critical $4,000 level was firmly held, further boosting market sentiment.
- 23:15: After reaching a climax, the market saw a slight pullback, with ETH briefly climbing to $4,045 before retreating to $4,042.87, marking the end of the intense volatility phase.
Reason Analysis 🔍
This sharp fluctuation in ETH was mainly driven by the following two core factors:
Macroeconomic and Policy Expectations
The global economic situation and policy direction had a direct impact on market psychology. The recent sharp rise in the probability of a Federal Reserve rate cut, the government funding deadlock, and other external uncertainties prompted capital to quickly shift from safe-haven assets to risk assets. The market anticipated a forthcoming accommodative liquidity environment, prompting investors to increase their holdings in ETH and other digital assets, triggering a buying frenzy.Chain Reaction of Liquidations in the Derivatives Market
Within the derivatives market, massive liquidations of perpetual contracts triggered a chain reaction. In less than an hour, the total amount of liquidations across the network reached $30 million, with short positions accounting for as much as 94%, and net inflows of main funds reached about $300 million. Such large-scale forced liquidations and position adjustments quickly released a large amount of bottom-fishing buying, driving ETH prices to rebound sharply from the lows.
Technical Analysis 🔧
Based on Binance USDT perpetual contract 45-minute ETH/USDT candlestick data, this rally showed strong technical buying signals, while also indicating some overbought risks:
- Candlestick Patterns: The chart showed consecutive "Three White Soldiers" patterns (three or more consecutive bullish candles), indicating that buyers continued to take the initiative, pushing prices higher.
- Moving Average Trends: ETH price is currently above the MA5, MA10, MA20, and MA50 moving averages, all of which are in a bullish alignment. At the same time, the EMA5/10/20/50/120 moving averages also show a strong upward trend.
- Oscillator Indicators: The J value is in the overbought zone, and the RSI indicator is also high, suggesting a potential short-term pullback risk; however, the divergence in the KDJ indicator indicates increased trend strength, suitable for short-term momentum trading.
- Volume Analysis: Recent trading volume surged by 166.86%, significantly exceeding the 10-day and 20-day average volumes, and the OBV indicator broke previous highs, further confirming the strong buying interest entering the market.
- Other Technical Details: The steep rise in EMA20 and EMA24 (with slopes of 1.02% and 0.86%, respectively) reflects ample upward momentum, but as the price approaches the upper band, it also signals some risk of short-term profit-taking.
Market Outlook 🌅
In the short term, as technical indicators show some overbought signals and trading volume remains unusually active, ETH prices may experience volatile pullbacks at high levels. Investors should be alert to the risk of short-term corrections triggered by profit-taking.
In the medium to long term, if macroeconomic easing policies continue to deliver positive news and institutional and whale funds keep entering the market, ETH is expected to maintain its upward momentum. However, the instability of the derivatives market and the potential chain reaction from further liquidations also remind investors to maintain risk control while chasing gains, allocate positions reasonably, and avoid being caught off guard by sharp market fluctuations.
Overall, this surge in ETH prices is both an inevitable response to favorable policies and changing capital expectations, and a revelation of the operational risks in the derivatives market. In the future, while enjoying market dividends, investors should pay close attention to technical indicators and macro developments, adjust trading strategies in a timely manner, and remain rational and prudent.
