Summary of Ethereum Short Liquidation: A $112,000 Lesson and Reflection
Background and Thoughts on Opening a Position

On July 19, 2025, I opened a short position on Ethereum (ETH) at a price of $3,595. The decision was based on the following analysis:

At that time, my thinking was: ETH had risen from $2,800 to over $3,600 in early July, showing significant gains. I believed the price was overestimated and there was room for a pullback.
Technical Analysis: The daily chart showed that the Relative Strength Index (RSI) was in the overbought zone, suggesting a potential short-term adjustment. Although the 50-day moving average was rising, the 200-day moving average had been on a downward trend since June 21, indicating long-term weakness.
Market Sentiment: Recent market volatility had increased, and some investors were concerned about a pullback. I anticipated that ETH might fall to the support level of $3,400 and planned to profit from the decline.

Based on these judgments, I chose a higher leverage ratio, with my position occupying a large proportion of my account funds, confident that I could seize short-term decline opportunities and directly take my child back to my hometown, while posting on Twitter that I wouldn't be watching the market. https://x.com/ZenMuskX/status/1946226804102152553
https://x.com/ZenMuskX/status/1946226804102152553

Liquidation Process
Things did not go as planned; the market did not develop as I expected:

July 20: The price of ETH broke through $3,700, reaching $3,714, a new high since March 2024. My position began to incur losses, but they remained within a controllable range. I believed this was a short-term fluctuation and decided to hold on, anticipating a pullback.
July 21: The price further rose to $3,800. I had set my stop-loss at $3,750, but failed to adjust it in time. Ultimately, my account was forcibly liquidated due to margin not being added in time, resulting in significant losses.

Analysis of the Reasons for Liquidation (Post-Mortem)

There were several key factors behind this price increase:

Institutional Capital Inflow: According to discussions on platform X, the ETH ETF attracted over $2 billion in inflows within two weeks, with a single-day record reaching $727 million. Institutions like BlackRock significantly increased their ETH holdings, boosting market confidence.
Market Sentiment: The Fear and Greed Index reached 72 (Greed), indicating a strong bullish sentiment in the market. Technical indicators (such as Bollinger Bands expansion and bullish MACD signals on the 4-hour chart) further reinforced the upward momentum.
External Factors: Increased activity in decentralized finance (DeFi), rising staking yields, and institutions' long-term optimism about ETH collectively drove the price up.

I failed to pay timely attention to these dynamics, relied too much on technical analysis, and neglected changes in fundamentals and market sentiment.

Reflections and Lessons
This liquidation made me realize deeply:

Lack of Awe for the Market: I underestimated the complexity and unpredictability of the market. The rapid inflow of institutional capital completely changed market trends, and I failed to adjust my strategy in time. The market does not shift according to individual will; any prediction can be overturned by external factors.
Insufficient Risk Management: My position was too heavy, and the leverage ratio was too high, leading to immense psychological pressure and an inability to calmly respond to price fluctuations. The stop-loss point was also not flexible enough, failing to effectively control losses.
Unclear Understanding of Personal Risk Tolerance: I overestimated my psychological endurance, hesitating when faced with losses, and missed the best opportunity to stop-loss.
Incomplete Information Acquisition: I relied too much on technical indicators, neglecting key information like institutional capital inflows and ETF dynamics. In the future, I need to analyze market fundamentals and real-time dynamics more comprehensively.

Decisions for the Next Cycle:

Stay Humble: The market is always more complex than you think. Do not be overly confident in your judgments; be ready to respond to surprises.
Strict Risk Management: Set reasonable stop-loss points, control position sizes, and ensure that losses do not impact overall capital safety.
Pay Attention to Market Dynamics: Closely monitor news, institutional movements, and on-chain data (such as ETF inflows and changes in trading volume), as these are often key drivers of price fluctuations.
Understand Your Limits: Trading is not only a technical endeavor but also a psychological battle. Ensure that positions and leverage ratios are within your psychological tolerance.

Summary
This ETH short liquidation was an expensive lesson, but it also made me more mature. I will take this as a warning, optimize my trading strategy, strengthen risk management, and face the market with a more humble attitude.
I hope my experience can remind myself: the crypto market is full of opportunities but also fraught with crises; caution and discipline are key to survival.

Salute to ETH! Grateful for the support and companionship of group partners!
#Liquidation #Awe for the Market #Lessons