Last night, the cryptocurrency market seemed to be caught in the eye of a storm, with the price of Ethereum (ETH) plummeting from a high of $2679 like a meteor, crashing down to $2379 in a short period of time. The 300-point drop shocked countless investors awake from their dreams, watching their assets in their accounts shrink significantly, and their hearts sank to the bottom. In an instant, various speculations ran rampant, with many pointing fingers at the U.S. debt crisis, believing that this macro factor had once again disturbed the tranquility of the market. But is that really the case? Today, we will analyze layer by layer to restore the true face of this plunge. The culprit behind the plunge: not the U.S. debt crisis, but another hidden reason. When the news of ETH's price drop came, many investors' first reaction was the warning of a debt default issued by U.S. Treasury Secretary Yellen earlier. After all, once a debt crisis breaks out, its impact can shake the global financial market, and the cryptocurrency market is naturally hard to remain unscathed. However, if we carefully comb through the timeline, we will find flaws in this reasoning. Yellen's warning was issued during the day in the U.S. (midnight Beijing time), at which time the market only showed slight fluctuations without stirring up too much wave. However, the main drop of ETH occurred later, at midnight Beijing time. If this plunge was indeed caused by a systemic risk triggered by the debt crisis, then according to logic, other risk assets such as stocks and commodities should also have fallen sharply at the same time. However, that night, U.S. stock futures only slightly dipped by 0.5%, forming a stark contrast with ETH's plunge. It can be seen that this ETH plunge was more like an “earthquake” within the cryptocurrency market, rather than being driven by external macro factors. The first real culprit: whale sell-off triggered market panic. In the world of cryptocurrencies, every move of the whales can stir up huge waves. Through on-chain data analysis, we found a key clue. At the critical moment of the plunge, which was 24:29, a massive sell order of 106.751 ETH suddenly hit the market. Calculating at the time's price, this transaction was worth about $260,000. Such a large-scale transaction could not be initiated by ordinary retail investors; it was most likely orchestrated by a cryptocurrency whale. What is even more alarming is that before the plunge occurred, a mysterious address transferred 18,000 ETH to the exchange, worth about $45 million, which is undoubtedly a typical precursor to unloading. When the whale suddenly sold a large amount of ETH during the market's most illiquid hours at night, it was like throwing a heavy bomb into a calm lake, instantly stirring up a thousand waves and triggering a panic sell-off in the market. Other investors saw such a large sell order and worried that the price would fall further, thus also followed suit to sell their ETH, ultimately forming a stampede effect, resulting in a dramatic price drop. The second real culprit: technical breakdown triggered a chain reaction. In addition to the whale sell-off factor, the technical breakdown also played a role in accelerating this plunge. In technical analysis, $2500 is an important support level for ETH’s price movement, which happens to be at the Fibonacci 78.8% retracement level, widely regarded by market participants as the “lifeline” for bulls. When the whales' sell orders surged like a tide and broke through this key support level, it was like a dam bursting, triggering a series of chain reactions. First, those programmed trading systems that had stop-loss orders were instantly triggered, with a large number of stop-loss sell orders flooding into the market, further exacerbating the downward pressure on prices. Secondly, panic sentiment quickly spread throughout the market; retail investors saw the price fall below the key support level, their psychological defenses completely collapsed, and they all followed the trend to sell, forming a powerful selling pressure. Moreover, the situation for leveraged bulls became even more difficult; as prices continued to fall, their margin was gradually eroded. When the margin ratio reached the forced liquidation line, the platform would automatically execute liquidation, forcibly selling their positions. These liquidation sell orders further pushed down prices, ultimately forming a vicious cycle of “dumping - breaking - stop-loss - and dumping again,” leading to ETH's price plummeting by 300 points in a short time. The impact of the plunge: leveraged players suffered heavy losses, while spot players need to respond calmly. The “disaster scene” of leveraged accounts. For those investors who use leveraged trading, this ETH plunge is undoubtedly a nightmare. Taking a common 10x leverage long position as an example, assuming an investor opened a position at $2600, calculating based on a 10% margin rate, when the price fell to $2379, the investor's loss reached $221, a decline of about 8.5%. With the amplification effect of 10x leverage, this 8.5% decline is enough to cause most leveraged accounts to be liquidated. On-chain data shows that last night, the liquidation amount of ETH perpetual contracts reached as high as $120 million, with more than 30,000 investors losing everything, their wealth instantly turned to dust in this plunge. The “paper drawdown” of spot players. If you are a holder of ETH, seeing the price drop from $2679 to $2379, your account assets have indeed shrunk to a certain extent, with a loss magnitude of about 11%. However, let’s take a longer-term view; looking back at ETH's price movement this year, it rose from a low of $1600 at the beginning of the year to $2600, with a cumulative increase of up to 62%. From historical data, ETH has seen daily declines exceeding 10% more than 20 times each year, and in most cases, the subsequent prices are able to recover lost ground. Therefore, for spot players, although there is a paper drawdown in assets in the short term, as long as ETH's long-term upward trend remains unchanged, there is no need to panic too much; staying calm and rationally viewing market fluctuations is key. A review of ETH's single-day plunge cases in the past year. To better understand ETH's price volatility, let’s review some single-day plunge cases of ETH in the past year. Over the past year, the ETH market has experienced ups and downs, with multiple instances of significant single-day declines. For example, on [specific date 1], ETH's price dropped by [X]% in one day, due to [explain the main factors that triggered the plunge that day, such as changes in market regulatory policies, a large crypto project blowing up, etc.]. Another example is on [specific date 2], due to [specific event], ETH's price plummeted by [X]% in a single day. By analyzing these historical cases, we can find that although ETH's price fluctuations are fierce, they are often triggered by specific events or factors, and typically, the market will self-repair and adjust for a period after the plunge. This further confirms the earlier point we made; for spot investors, short-term price fluctuations do not necessarily mean a loss of long-term investment value. In summary, although last night's ETH plunge was fierce, it is not incomprehensible. Through in-depth analysis of the events, we have seen the true face of the two major culprits: whale sell-off and technical breakdown. For investors, this plunge is undoubtedly a profound lesson, reminding us once again that the cryptocurrency market is full of risks and uncertainties. When investing, it is essential to fully understand the market, allocate assets reasonably, use leverage cautiously, and avoid blindly following trends. Only in this way can we protect our asset safety as much as possible in the turbulent cryptocurrency market.

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