Why did Ethereum quickly pull back after breaking its historical high? It's actually the result of multiple pressures working together 📉

📌 Profit-taking triggers selling pressure

After Ethereum broke the previous high of $4885 and surged to $4957, early investors—including long-term holders and institutions—rushed to cash out profits at the peak. Especially in the context of increasing macro policy uncertainty, more funds prefer to secure their gains, leading to a concentrated sell-off that quickly triggered a price drop in the short term.

📉 Technical indicators signal a peak

As it approached the key psychological level of $5000, several technical indicators had already indicated overbought and peak risks. For example, weekly charts showed consecutive “long-legged doji” and “engulfing candle” patterns, suggesting a weakening upward momentum. On August 25, there was even a single-day drop of over 8%, forming a large bearish candlestick that broke support. Currently, the price is oscillating in the range of $4330–$4370, with support seen at $4400 and resistance at $4800.

🌍 Macroeconomic sentiment weakens

Although the expectation of a Federal Reserve interest rate cut once boosted the market upward, better-than-expected economic data (such as the Producer Price Index) later raised investors' concerns that monetary policy may remain tight, putting overall pressure on risk assets. The outflow of funds from Bitcoin ETFs has exacerbated cautious sentiment in the market. Although Ethereum ETFs maintained net inflows, they also struggled to completely shake off the drag from the broader market.

⚡ High leverage exacerbates the chain reaction of declines

This rapid pullback was also magnified by leverage liquidation. In the past 24 hours, the total liquidation amount for Ethereum reached as high as $54.67 million, accounting for 30.56% of the total liquidation amount. The concentrated sell-off triggered continuous forced liquidation of long positions, creating a cycle of decline—liquidation—further decline.

🔍 In summary, this decline is driven by four major factors:

✅ Profit-taking pressure

✅ Technical peak signals

✅ Macroeconomic policy uncertainty

✅ High leverage liquidation effects

Although institutions continue to accumulate long positions, the market still needs to digest the selling pressure in the short term. Future trends should closely monitor the effectiveness of the $4400 support and the further direction of Federal Reserve policy. #ETH