Last night's sharp drop in ETH is the result of technical pullback pressure, institutional capital withdrawal, macroeconomic pressure, and deteriorating market sentiment. It is both a signal of short-term adjustment and exposes the vulnerability of the crypto market's deep binding to the macro economy. Below is a specific analysis:
1. Technical Aspect: Double top pattern and key support lost, bearish momentum fully released
Deadly signal of the double top pattern
ETH price has recently formed a distinct double top structure:The first peak is around $4480, rebounding to $4385 after a pullback (the morning high on August 19) forming the second top, but failing to break the previous high, confirming a technical reversal.
The neck line of the double top pattern is at $4200; yesterday's sharp drop directly pierced this key support, triggering programmatic selling and concentrated stop-loss selling, forming a 'long liquidation' effect.
Moving Average System and Indicator Divergence
The price has fallen below the 5-day and 10-day moving averages, and the effectiveness of the 20-day and 30-day moving averages' support has weakened, presenting a 'short-term pullback + medium to long-term upward trend destruction' pattern.
The MACD indicator has formed a death cross, and bearish momentum continues to release; the RSI indicator once touched the overbought zone at 80, indicating a strong pullback demand technically.
Key Price Level Gaming
Resistance Level: $4267 (Dense Selling Zone), $4350 (Nearby Previous High).
Support Level: $4160 (Short-term Psychological Support), $4000 (Historical Integer Level). If it falls below $4000, it may accelerate the drop to the $3800 - $3950 range.
2. Capital Situation: A chain reaction of institutional capital withdrawal and leveraged liquidations
ETF funds continue to flow out
On August 18, the ETH spot ETF saw a net outflow of $245 million in a single day, indicating increased short-term profit-taking pressure.
Since 2025, the cumulative net outflow of ETH spot ETFs has reached $2.4 billion, directly weakening buy support due to institutional 'faith collapse.'
Whale Address Sell-off Tide
Early ICO participants transferred $19 million in ETH to exchanges, potentially increasing market selling pressure.
On-chain data shows that the proportion of 'diamond hands' holding ETH for over a year has plummeted from 63% to 55%, while short-term holders (holding for 1 month) have seen a surge of 47% in selling volume, worsening the chip structure.
Leverage Market Chain Liquidation
The derivatives market's open contracts remain high, but the risk of short liquidations in the short term is increasing.
A certain whale shorted ETH with 50x leverage, triggering a chain liquidation of 160,000 ETH (worth $306 million), directly causing a single-day price drop of 14%, forming a 'liquidation-drop-more liquidations' death spiral.
3. Macro Aspect: The Dual Shock of Trump's Tariff Policies and Federal Reserve Policy Expectations
Tariff policies trigger global risk asset sell-off
The Trump administration's raid-style tariff policies have led to escalating global trade tensions, sharply reducing investor risk appetite.
Cryptocurrencies, as high-risk assets, bear the brunt of capital withdrawals. Bitcoin fell below $113,000 in a single day, with ETH experiencing even greater declines, demonstrating the market's sensitivity to policy black swans.
Federal Reserve Policy Expectations Shift
US inflation data exceeded expectations, cooling market expectations for Federal Reserve rate cuts, which puts pressure on risk asset valuations.
Investors are paying attention to the Federal Reserve's annual economic symposium in Jackson Hole; if signals of 'high rates maintained longer' are released, ETH may further decline.
4. Market Sentiment: Panic Spreads and Narratives Collapse
Investor sentiment indicators worsen
CryptoQuant data shows that the exchange's ETH reserve has increased, indicating a reduced demand for self-custody and increased selling pressure.
Social media sentiment index shows that market panic sentiment is spreading, with investors shifting from 'greed' to 'extreme fear.'
Long-term Concerns of Intensifying Ecological Competition
Layer 1 Competition: Solana continues to eat into ETH's market share with high TPS (50,000+) and low Gas fees ($0.0002). In Q1 2025, the SOL/ETH exchange rate rose by 120%, indicating a shift in capital to alternative chains.
Layer 2 Diversion: Gas fee income from the ETH mainnet plummeted by 99% year-on-year, with an annual inflation rate of only 0.76%, diluting the value of the mainnet.
Regulatory Uncertainty: SEC's intensified scrutiny of ETH staking demands that spot ETFs explicitly 'do not participate in staking,' weakening its attractiveness as a 'yield asset.'
5. Market Outlook: Key nodes of short-term fluctuations and long-term differentiation
Short-term Trends
If the $4000 support holds, it may rebound to the $4200 - $4350 range; if it breaks, the target drops to $3800 - $3950.
Close attention should be paid to Federal Reserve policy signals, institutional capital flows, and changes in on-chain transaction volume.
Long-term Logic
Bullish Factors: ETH's position as the leading chain for RWA (Real World Asset) tokenization is solid, with tokenized government bonds (such as BlackRock's BUIDL fund) attracting long-term institutional allocation.
Bearish Risks: If Eth2.0 sharding technology and Layer 2 scaling lag, users and traffic may be diverted to competitors like Solana, weakening the network effect.
Last night's sharp drop in ETH price seemed unexpected, but technical indicators had long warned. The 30-minute RSI shows oversold conditions might rebound, but the 4-hour MACD is still in bearish divergence, with downward pressure not yet released. Institutional funds exploited the liquidity trap before the US stock market opened, smashing prices while retail investors chased high. Despite the price drop, Ethereum ETFs saw a net inflow of $2.9 billion in a week, showing institutions were bottom-fishing. The derivatives market's open contracts hit a new high, with a high proportion of long liquidations, allowing institutions to accumulate at low levels.
Article Outline:
1. Last Night's Plunge: Seemingly Unexpected, But the 'Script Was Written Long Ago'
Last night's ETH movement is a 'textbook case' of technical analysis
Institutional funds set a 'technical trap'
2. Institutional Funds: 'Under Currents' Behind the Plunge
Institutional funds are secretly 'bottom-fishing'
The derivatives market is 'stirring things up'
Today's Trend Judgment
Daytime Period: May pull back to the $4150 - $4180 range or first drop to around $4064 for a rebound; $4064 is the 'death line.' If it breaks, it may test the $3995 - $3800 range.
Evening Period: Key focus on the performance of the US stock market at opening; holding above $4064 and reclaiming $4200 may lead to a rebound to $4350 - $4400, otherwise it may test the demand zone at $3800.
Operational Suggestions
Short-term Traders
Short Position Strategy: Attempt to short in the $4150 - $4200 range, stop loss at $4250, target below $4050.
Long Position Strategy: Stabilize in the $4064 - $4080 range, stop loss at $3990, target above $4180.
Risk Control: Risk per trade should not exceed 2 - 3% of capital; be wary of the amplified volatility at the US stock market opening tonight; pay attention to Federal Reserve policy expectations and the US dollar index trend.
Market Opinion: The crypto market is a battlefield for 'cognitive monetization'; last night's sharp drop in ETH is a result of institutional 'reshuffling' and smart money 'positioning.' The net inflow of funds into Ethereum ETFs shows that institutions regard it as a 'core digital asset' strategic allocation. With ETH around $4100, the direction will be determined by institutional funds and macro sentiment after tonight's US stock market opening; a calm analysis is urged to seize opportunities.
BTC BTH CET PEPE
