1. Market review
After 20:00 last night, the crypto market experienced a rapid decline, led by Bitcoin and Ethereum, with BTC briefly dropping below 117,000 and ETH falling below 4,480. The entire market saw significant volatility in a short period, with a large-scale liquidation of contract funds, dramatically amplifying panic sentiment.
2. Main reasons for the crash
The loss of key technical levels triggered a chain reaction.
Major cryptocurrencies had previously oscillated above key support levels, but the trading volume failed to increase, leading to price pressure and a decline. When BTC broke below the support level of 118,000, a large number of automated stop-loss orders and programmed sell orders were triggered, causing a cascading drop.
Concentrated release of high leverage risks in the contract market
Before the crash, the perpetual contract market had a high leverage ratio, and the funding rate was at a high level. The main players quickly smashed prices during low liquidity periods, liquidating high-leverage long positions, resulting in over a hundred million dollars in long position liquidations within a short time, creating a cascading effect.
Dual impacts from macro and news factors
After the release of macro data from Europe and the U.S., the market's liquidity expectations tightened, affecting sentiment in the crypto market. At the same time, some unverified negative news, such as rumors of exchange regulation, spread in the community, amplifying the motivation for panic selling.
Reallocation of major capital's chips
The rhythm and intensity of this round of decline align with the characteristics of proactive wash trading. By smashing prices during low liquidity periods, the main players can recover chips at a lower cost while weakening the selling pressure from trapped positions above, creating space for subsequent rebounds.
3. Key observations for the future market
BTC: Short-term support to watch is the 116,500–117,000 range. If it stabilizes effectively, a technical rebound is expected; if it fails, there is a risk of further testing the 115,000 level.
ETH: Support to watch is in the 4,450–4,480 range, with resistance in the 4,560–4,600 range.
Volume: If the rebound does not come with a recovery in volume, it should only be seen as a correction from overselling.
Summary:
Last night's crash was more a result of excessively high leverage compounded by a concentrated release of news interference, rather than a trend reversal caused by a single negative factor. For intermediate to advanced traders, recognizing the structure of this washout and cascading effect can help find better entry opportunities amid panic.
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