BTC
In yesterday's article, we reminded about the possible pullback trend of BTC. However, during the nighttime market, the drop exceeded many people's expectations. From the candlestick chart, the current price has already fallen below the 4-hour midline and is at the lower line, with no signs of stabilizing yet. Therefore, we need to wait for the performance between the opening of the U.S. stock market and midnight. The influences of economic news from the U.S. are still present.
From a price perspective, we are currently at a stage of bottoming out. The previous two pullbacks stabilized and rebounded around 93,000, and if there is no particularly negative news this time, it is likely to stabilize around 93,000. In terms of market sentiment, we also notice that many key opinion leaders (KOLs) and influencers are relatively optimistic about the current market (compared to the previous period), which demonstrates that market sentiment is still quite active. We can choose to arrange spot purchases between 93,000 and 95,000. For contract trading, it is important to note that if the price drops below 92,500, it may further decline to between 91,000 and 90,000, so be mindful of the risks. Here, it is still recommended to focus on spot trading.
ETH
ETH was relatively well positioned during yesterday's decline, but looking at the current price, the rebound may be somewhat weak. The 4-hour MACD has already started to be below the 0 axis, and the BOLL lines have also started to turn downwards. This means that if there is no significant rebound in the coming days, it may continue to maintain a downward trend. However, overall, I believe there will be a small bullish candle formed here, leading to a stabilizing market. Generally, ETH tends to follow BTC in a downward market, so the main direction is still dominated by BTC.
In terms of trading volume, the volume during this decline of ETH has not increased significantly, which also indicates a lack of momentum. The core still relies on the sentiment of the overall market, so the upcoming rebound may not be very strong, so it may be appropriate to reduce the amount of spot purchases.
Looking at the liquidation volume to gauge the actions of major players.
Today, we mainly discuss liquidation volume, which is a key data point during major market fluctuations and is also an important data point for me to judge whether this adjustment in volatility is in place.
A liquidation occurs when a futures trader's position reaches the liquidation line; the system will automatically close the position, returning any excess balance, while any deficits will naturally be recorded as negative, meaning the trader owes money to the exchange. Liquidations usually happen when losses approach 100%, but sometimes there are many orders to close, so there may be a queue, resulting in discrepancies between the actual closing price and the estimated price.
Liquidation is the main way for major players to clean up the market's high leverage. In the past, prices would spike, but this went against the natural order, so exchanges prohibited or avoided it. After all, the traces of such manipulation are too obvious. Of course, the core purpose of liquidation is to clean up high leverage during a major upward wave or a downward trend, allowing them to gain more profit.
After all, the money in the market is essentially the early arrivals earning the money of the later arrivals, or winners earning the money of the losers, and high leverage gains coming from liquidated positions.
Additionally, liquidation can allow major players to avoid profit-taking behavior in the upcoming market. For example, if I want to drive the price up, I will first sell off to force high-leverage players to liquidate and exit, thus preventing them from taking profits during my upward movement, allowing me to take positions at the peak.
Therefore, liquidation mainly cleans up unstable chips. When your chips are very stable, such as holding onto spot without moving, it does not affect the major players' subsequent layout, and naturally, you won't be targeted.
Of course, timing is crucial for liquidation because if major players find that someone is competing for chips during the sell-off, they may increase the selling volume or stop the sell-off altogether, causing the market to enter a consolidation phase. Generally, major players who repeatedly sell off do so to entice others to compete for chips, allowing them to collect enough chips for better control of the overall situation.
From the current situation, the market has been crashing since December, and we have now experienced three major sell-offs, with each liquidation volume gradually decreasing, indicating a trend of reducing unstable chips in the market, which aligns with the needs of the major players. Additionally, the first two sell-offs stabilized around 93,000, showing that the main players cannot drive the price too low, or else they would be making clothes for others. Therefore, overall, this decline appears fierce, but in reality, there is already a trend of improvement. As long as you hold onto the spot, there won't be much impact.