The crypto market is like an absurd drama without a script, but smart people can always read between the lines in chaos. Last night's waterfall-like plunge of ETH made countless people exclaim, "the wolf is coming", but the truth often lies beneath the surface—this sharp drop was both a necessary adjustment on the technical side and a signal of the undercurrents of institutional funds.

Last night's sharp drop: seemingly unexpected, but in fact, the "script was already written"

Last night's ETH trend was a textbook case of technical analysis. In the afternoon, there was a pullback, and before the US stock market opened, it surged to $4340, only to slide down to $4064 like a slide. This is not "the market randomly stirring up wind", but a "premature warning" from key technical indicators: the 30-minute RSI dropped to the oversold zone of 22.7, indicating that the short-term drop was too severe and a rebound could occur; however, the 4-hour MACD is still diverging in a bearish manner, and downward pressure has not been fully released. What’s more, this rebound just happened to be caught in the "liquidity trap" before the US stock market opened—institutional funds took the opportunity to sell when retail traders chased high, directly pushing the price down.

For example: it’s like seeing a store having a sale while shopping, rushing in only to find it’s a "clearance sale" trap, but the owner had already calculated that you would take the bait. Last night's ETH trend was a "technical trap" set for retail traders by institutions.

Institutional funds: the "underlying current" behind the sharp decline

Don't be fooled by the price drop; institutional funds are secretly "bottom fishing". Data shows that Ethereum ETF had a net inflow of $2.9 billion in one week, accounting for 80% of the total inflow into crypto ETFs, with a cumulative inflow exceeding $11 billion in August. What does this mean? It’s equivalent to $160 million of "smart money" buying ETH every day.

But why are prices still falling? Because the derivatives market is "stirring things up". Futures open interest has hit a new high of $60.8 billion, with nearly 90% of long positions liquidated, indicating that leveraged traders have been "washed out". Institutional funds are taking the opportunity to accumulate at low levels, collecting retail traders' chips into their own pockets.

Today's trend: some small skirmishes during the day, and a "decisive battle on the Forbidden City peak" at night.

Based on technical analysis and market sentiment, I have a clear judgment on today's trend:

  • Daytime period: may first pull back to the $4150-$4180 range, or drop to around $4064 before rebounding. In any case, $4064 is the "line of life and death"; if it breaks, it could dive down to $3995-$3800.

  • Evening period: the key is to watch the performance after the opening of US stocks. If it holds above $4064 and recovers $4200, it may rebound to $4350-$4400; conversely, the demand zone at $3800 may be tested.

Operation advice: short-term "quick in and out", long-term "buy on dips".

Short-term traders:

  • Short position strategy: attempts can be made if it rebounds to the $4150-$4200 range, stop loss at $4250, target below $4050.

  • Long position strategy: it can be arranged if it stabilizes in the $4064-$4080 range, stop loss at $3990, target above $4180.

Risk control is the "lifeline": single trade risk should not exceed 2-3% of the principal, be cautious of the amplified volatility at the opening of US stocks in the evening, and pay attention to the expectations of Federal Reserve policies and the US dollar index trends.

The crypto market has never been a casino for "getting rich overnight", but a battlefield for "cognitive monetization". Last night's plunge of ETH is a reshuffling by institutions and a layout by the smart money. As analyst James Seyffart said: "The continuous net inflow of Ethereum ETF marks the strategic allocation of institutions treating it as a 'core digital asset'."

Right now, ETH is struggling around $4100, but the real contest has just begun. After the US stock market opens tonight, the flow of institutional funds and macro sentiment will determine the next key direction. Will you choose to be led by market sentiment, or calmly analyze and seize opportunities?

I am Shence, follow me to penetrate the fog and see the truth of the crypto market!#加密市场回调