Recently, the cryptocurrency market has been quite lively, with Ethereum being the focal point. After reaching an all-time high, the tug-of-war between bulls and bears has become intense, and the market trends have become quite confusing. But don't panic; I will analyze the situation from multiple dimensions.
On the early morning of August 23, ETH certainly stole the spotlight, peaking at $4888, directly refreshing the historical high set in November 2021, with a 24-hour increase of over 14%. This surge ignited everyone's enthusiasm, and many are fantasizing about financial freedom. But let's not forget that the cryptocurrency market has always been a place of both risks and opportunities, and extreme volatility comes along with it.
In the past 24 hours, the total liquidation amount in the market reached a staggering $694 million. Among them, short positions accounted for 68% of the liquidations, amounting to about $470 million, while long positions faced liquidations of $230 million. This data serves as a reminder that trading with leverage carries significant risks; a small misstep could lead to total loss.
In the current market, what everyone is most concerned about is how ETH will perform next. I've analyzed it, and there are roughly two scenarios. Looking at it optimistically, if ETH can firmly stay above $4700, it is very likely to continue rising towards the $5000 target.
Moreover, Polymarket predicts that the probability of reaching $5000 before the end of August is as high as 64%. However, if the market doesn't look so optimistic and experiences a pullback, it could oscillate in the range of $4500 to $4430. This oscillation in this range is mainly to digest profit-taking while waiting for the Federal Reserve's policy to be implemented. After all, the Federal Reserve's policies have a significant impact on the cryptocurrency market.
In fact, a pullback after ETH's new high is considered a normal technical correction. From a broader perspective, driven by the three factors of interest rate cut expectations, institutional buying, and deflationary mechanisms, the probability of a mid-term breakthrough at $5000 is still quite high. However, in the short term, we should remain vigilant against market volatility triggered by leveraged liquidations. But looking at it from another angle, each deep pullback is actually a good opportunity for long-term positioning.
For us investors, it is essential to adhere to the principle of 'buy low, sell high'. We must not be swayed by emotions and blindly chase after highs or panic sell. Chasing highs and selling lows is a major taboo in the cryptocurrency world, and it can easily lead to losses. Additionally, everyone should pay close attention to the Federal Reserve's policies in September and the ETH/BTC exchange rate recovery signals, as these are crucial for judging future market trends.
