The deep V rebound that ETH staged around the 4,500 point this afternoon is not a signal of long exhaustion, but rather a typical action of the major players washing the market. The consistent operating thought of the operators is as follows: to quickly clear floating longs through rapid declines and reduce the burden of price increases, with the goal of moving upward more lightly in the future.

Since last night, the number of liquidations in the cryptocurrency market has exceeded 120,000, and the short-selling attack has made many long investors feel a chill down their spine.

However, just as market sentiment plunged into panic, prices quickly rebounded to above $4,500—this is no coincidence, but rather resembles a well-planned 'wash trading' scheme. The intention of the major players is very clear: to create panic through a sharp drop, inducing retail investors to stop-loss and cut losses, while washing out indecisive long positions to pave the way for subsequent rises.

Expectations for a rate cut by the Federal Reserve continue to rise.

This sudden drop happened just before the Federal Reserve's September interest rate meeting. This Thursday (September 18), the interest rate decision will be announced, and currently, the market has a strong consensus on the expectation of a rate cut. According to the CME's “FedWatch” tool, the probability of a 25 basis point rate cut in September has surged to 92%.

The strengthening of rate cut expectations mainly stems from the latest employment data: The number of initial jobless claims in the U.S. unexpectedly rose to 263,000 in August, the highest level since October 2021, indicating that the labor market is cooling, which provides data support for the Federal Reserve to implement rate cuts.

Capital flow: Institutions are quietly positioning for the 'rate cut market'.

In the traditional financial sector, a rate cut usually leads to a decline in the yields of fixed-income products, making it easier for funds to flow into high-risk assets, with cryptocurrencies often being one of them.

The staking yield of ETH itself is already higher than many government bonds and savings products. Innovative protocols like MITO allow users to convert ETH into miETH, potentially achieving a comprehensive annualized yield of 6%-8%.

This means that during a rate cut cycle, Ethereum not only has capital gain potential but also offers considerable holding returns. Institutional funds have clearly sensed the opportunity and are quietly positioning themselves.

Xuanji's technical logic: Is the sharp drop actually a bullish signal?

From the market performance perspective, despite the rapid pullback of ETH, strong support is shown around 4450 USD, and the price quickly recovered above 4500 USD, validating the effectiveness of that area.

At the same time, the trading volume during the decline did not continue to expand, indicating that the actual selling pressure is limited. This seems more like a 'precise liquidation' targeting high-leverage contracts rather than a large-scale capital flight.

The daily moving average system still shows a bullish arrangement; the short-term pullback has not changed the medium to long-term trend, but rather solidified the foundation for future price increases.

Xuanji's short-term strategy and key positions

For short-term traders, the following positions are worth paying special attention to:

  • Support levels: 4500 USD (psychological level), 4450 USD (strong support)

  • Resistance levels: 4650 USD (intraday breakout target), 4750-4800 USD (key resistance area)

  • Turning point: 4550 USD

Operational advice:

You can gradually build long positions in the 4500–4530 range, with stop-loss placed below 4450, initially targeting 4650, and holding if it breaks through to around 4750.

If you are unsure about the specific timing for entry, you may pay attention to Xuanji and keep an eye on subsequent analyses of Xuanji, as strategies should be tailored to individual circumstances.

Xuanji survival reminder:

  • Strict stop-loss: Refuse to hold positions, especially during recent high volatility, as one mistake may cause significant drawdown.

  • Control positions: No single trade should exceed 10% of total capital, maintaining account flexibility.

  • Focus on the Federal Reserve meeting: The interest rate decision on Thursday may be a key turning point, so make sure to prepare in advance.

Note: Once the Federal Reserve officially starts the rate cut cycle, the logic of funds flowing into high-risk assets will continuously strengthen. Hold tight, maintain the crucial support at 4450, and a bullish rebound to 4750 or even higher is just a matter of time.

I'm Xuanji, having struggled in this market for many years, I've encountered more pitfalls than you have walked paths. Follow me to avoid taking ten years of detours—In the crypto market, following the right person is 100 times more important than working hard blindly! If you don't know how to catch the timing, feel free to come find me in the village; I'm here 24/7 to protect my fans!