Event Review 📉
In the early hours of May 19, 2025, the ETH market experienced a severe shock. Initially, news continued to develop: the U.S. sovereign credit rating was downgraded, Moody's announced the removal of the last AAA rating, and macro-negative factors such as adjustments in U.S.-China trade policies repeatedly shook investor confidence. Meanwhile, high-leverage trading and technical stop-loss orders were triggered en masse, creating a chain liquidation effect that caused ETH prices to plummet rapidly in a very short time.
Timeline ⏰
00:44 — Market hears news of the U.S. sovereign credit rating downgrade, macroeconomic uncertainty begins to rise.
00:55 — Moody's officially downgrades the U.S. credit rating, raising market vigilance due to debt risks and fiscal issues.
01:00 — ETH price hovers around $2573–$2574, with traders generally in a high-leverage operating state and key support levels approaching.
01:56 — In just 56 minutes, ETH price rapidly dropped to about $2487, a decline of 3.39%, triggering a large number of stop-loss orders.
02:20 — Under continued selling pressure, ETH price further dipped to $2449, with a cumulative decline of nearly 4.82%, and the risk of technical liquidation became more evident.
02:25 — The market briefly stabilizes, and ETH rebounds to about $2472.55, with some funds buying on dips, but the overall volatility has not yet been resolved.
Reason Analysis 🔍
This significant volatility is mainly driven by the following factors:
Macroeconomic and policy shocks
The downgrade of the U.S. credit rating and government debt issues have made the market very worried about the economic outlook.
Adjustments in U.S.-China trade policies have increased global economic uncertainty, enhancing investors' risk-averse sentiment.
Chain liquidation triggered by leveraged positions
During high-level trading, many investors set tighter stop-loss orders.
Once the price breaks below the key support level (such as EMA52), it triggers a large number of forced liquidations, creating a chain reaction of liquidation and accelerating the price decline.
Technical selling pressure and sentiment shift
Key technical indicators show negative signals, and the comparison of long and short positions has deteriorated sharply.
The liquidation reports and large transaction data further confirm the spread of market panic, leading to intensified capital outflow.
Technical Analysis 🛠
Based on Binance USDT perpetual contract ETH/USDT 45-minute candlestick data, this technical analysis shows:
Short-term moving averages:
EMA5 crosses below EMA10, forming a death cross, indicating that downward pressure will continue in the short term.
Momentum indicators:
MACD shows a death cross, with a clear sell signal.
%B indicator falls below 0.2, indicating that prices are approaching the lower band, and the market is in an oversold state.
J value is extremely oversold, suggesting a possible short-term rebound, but the magnitude and strength remain uncertain.
Other technical indicators:
KDJ indicator diverges, with bullish strength significantly weakened.
OBV indicator falls below previous lows and shifts from positive to negative, indicating strong selling pressure and noticeable capital outflow.
Volume analysis:
Trading volume surged by 222.41%, but prices fell sharply, confirming the state of panic selling in the market.
Current trading volume is far above the 10-day and 20-day averages, indicating unusual trading activity, but this activity often comes with high risks.
Market Outlook 🚀
Although the current ETH market is in an oversold state, and some technical indicators suggest a possible rebound in the short term, the overall outlook remains full of uncertainties:
Short-term outlook:
Some buying on dips may lead to a slight price rebound, but if macro-negative factors continue to fester or key support levels are lost, the downtrend may continue.
Mid-term analysis:
With the ongoing development of U.S. fiscal and debt issues, coupled with global economic uncertainty, market volatility is expected to remain high. Traders should be wary of the risks of chain liquidations and keep an eye on future policy trends.
Long-term strategy:
Investors should focus on risk management, adjusting positions in a timely manner to avoid the risks of consecutive liquidations caused by high-leverage trading. Finding reversal signals and confirming bottom signs will be important bases for future positioning.
Overall, this severe volatility of ETH is not only caused by technical liquidations and sudden market sentiment shifts but also reflects the profound impact of the global macroeconomic environment on the crypto market. In the face of such multiple negative pressures, maintaining caution and flexibility will be principles that every trader must adhere to.
