When ETH plummeted from a historical high of $4794 to $4060, a total liquidation of over $5 billion across the network caused chaos — some panicked, while others strategically positioned themselves in the undercurrents. Today, I will combine on-chain data, technical signals, and macro perspectives to help you see through the market haze and understand the truth of the volatility: the major upward wave of ETH may come earlier than you expect!
1. Source of the crash: Triple strangulation triggers short-term market shock
1. On-chain liquidity crisis highlighted
In the past 30 days, the average daily trading volume of ETH has plummeted by 62%, and gas fees have once dropped below 5 gwei, directly causing ETH to shift from deflation to inflation, adding 28,000 units of supply. This marks the lowest network activity since 2023, with DeFi TVL shrinking to $80 billion, and the on-chain ecosystem is experiencing painful 'de-leveraging'.
2. Institutional withdrawals and whale sell-offs apply pressure
Veteran VCs like Galaxy and Polychain have transferred thousands of ETH to exchanges, with some institutional holdings nearing zero; more critically, FTX hackers sold 75,000 ETH for BTC in August, and the remaining 110,000 ETH still poses selling pressure. On-chain data shows that over the past week, whales have sold a total of 143,000 ETH, severely damaging market confidence.
3. Technical breakouts trigger chain reactions
After confirming the double top pattern at $4794, ETH broke the key support at $4500, igniting the quantitative strategy 'death spiral'. The MACD death cross on the four-hour chart and RSI oversold formed a divergence, with the daily Fibonacci 61.8% retracement level ($4060) becoming the last line of defense for bulls and bears.
2. Reversal signals: Three underlying logics are being reconstructed
1. On-chain capital flows are surging
At the moment of price plummet, the net outflow of ETH from exchanges surged 37% since August 15, with 'smart money' clearly hoarding at low levels. Especially around $4060, institutions aggressively purchased large orders of 5000 ETH each, gradually pushing the main cost area up to $4100-4200.
2. Technical indicators reveal golden signals
On the four-hour chart, ETH completed a 'double bottom' pattern at $4060, the KDJ indicator formed a golden cross in the oversold area, and trading volume increased 2.3 times from the previous low. More importantly, the ETH/BTC exchange rate rebounded from a low of 0.0335, which is a classic sign of the altcoin cycle starting.
3. Dual catalysts of policy and narrative
Cancun upgrade enters the final testing phase, Layer 2 gas costs are expected to drop another 90%, which will directly activate NFT, GameFi and other trillion-level markets; at the same time, the SEC has approved Ethereum ETF options trading, with $3.4 billion in bullish options betting on a breakout above $4000 before the end of August, and market expectations continue to heat up.
3. Precise combat plan: When to position? When to strike?
Short term (1-2 weeks): Focus on key watershed
Upward initiation condition: stabilize above $4133 (1-hour EMA 50), and daily trading volume exceeds $20 billion.
• Target and pressure: After breaking above $4150, the first target directly points to $4300 (20-day moving average).
Medium term (1-3 months): Wait for signals to end the volatility
Sign of ending the volatility: ETH/BTC exchange rate returns to 0.038, and the number of active addresses on-chain rises to 800,000/day.
• Conditions for the major upward wave to start: ① Break above $4528 (Fibonacci 38.2% retracement); ② Continuous net outflow from exchanges exceeding 100,000 ETH for 7 days.
Long term (6-12 months): Three engines drive towards $5000
• Cancun upgrade: Layer 2 scalability releases 10 times the potential for on-chain applications, expected to drive a 30% increase in ETH's market cap;
• Institutional funds: If global pensions increase their allocation of ETH from 0.1% to 1%, it will bring an incremental increase of over $300 billion;
• Halving effect: After the 2026 BTC halving, capital rotation may increase ETH's market cap share from 12% to 20%.
4. Ultimate conclusion: This is not the end, but the starting point of a new cycle
When the market is dominated by panic, we see a 'golden pit' rather than an abyss:
• On-chain holdings: Long-term holders' (LTH) share of holdings rises to 68%, a new high since 2023;
• Derivatives market: Funding rates returned to neutral from -0.05%, and short positions decreased by 47% from their peak;
• Historical patterns: ETH previously rose 10 times 14 months after dropping 85% in 2018, and rebounded 150% 6 months after being halved in 2022.
Fans, now is the time to test your understanding and patience! If you cut losses at $4060, you might miss a future increase of 300%; if you position around $4100, you might witness ETH breaking $5000 in a historic moment. Remember: a true bull market always starts amidst doubts and ends in exuberance.
Follow me, and with each step, I will use on-chain data and technical signals to guide you in accurately timing the market!
