Ethereum (ETH), as a leading cryptocurrency, has been widely watched since its inception. On December 16, 2024, ETH prices broke through the $4100 mark, setting a new historical high, but the severe selling pressure that followed intensified market volatility. This phenomenon has sparked widespread discussion and analysis, and this article will explore the serious selling pressure reasons and impacts after ETH broke $4100 from multiple perspectives.


1. Background of ETH Breaking $4100


Before analyzing selling pressure, we need to understand why ETH was able to break through $4100. On December 16, 2024, ETH prices continued to rise and broke through the $4100 mark, with Ethereum's market capitalization reaching $474,009,454,916 according to Coingecko data. This breakthrough was mainly due to several factors:

  • Increased Market Demand: Institutional and individual investors' demand for ETH is continuously increasing, driving prices up.

  • Development of DeFi: The rapid growth of decentralized finance (DeFi) applications has also increased demand for ETH.

  • Expectations for Technical Upgrades: The smooth progress of Ethereum 2.0 development has increased market confidence in its future performance.


2. Reasons for Selling Pressure


Although ETH prices broke above $4100, the severe selling pressure faced afterward mainly stems from the following factors:

1. Profit Taking

When ETH prices broke above $4100, many early holders and short-term speculators chose to take profits. These investors bought at low prices and sold at high prices to realize gains. This behavior is very common in financial markets, especially after rapid price increases.

2. Liquidation of Leveraged Shorts

According to Coinglass data, if ETH breaks below $4100, cumulative leveraged short liquidations will exceed $500 million. This means that a large number of leveraged short positions are forced to close, further intensifying the market's selling pressure.

3. Selling Pressure from Unlocked Staking

After the Ethereum Shanghai upgrade, validators are allowed to withdraw staked ETH. According to a report by Glassnode analyst Alice Kohn, there is expected to be about 170,000 ETH of selling pressure after the Shanghai upgrade is completed. This selling pressure mainly comes from network validators involved in staking and other addresses.

4. Changes in Market Sentiment

Investor sentiment changed significantly after the price broke $4100. Some investors began to worry that the price was too high and that future upside potential was limited, thus choosing to sell their ETH to lock in profits or avoid potential losses.

5. Macroeconomic Environment

The uncertainty in the global macroeconomic environment also affects the cryptocurrency market. For example, adjustments in the Federal Reserve's monetary policy and international trade tensions may trigger market volatility, leading investors to reduce their holdings of risk assets, including ETH.


3. Impact of Selling Pressure


1. Price Pullback

Severe selling pressure caused ETH price to quickly retreat from above $4100. This price pullback not only affected short-term investors' returns but also undermined market confidence.

2. Increased Market Volatility

A large amount of selling has increased market volatility, making prices more unstable. This is an adverse factor for long-term holders and institutional investors, as they prefer a stable market environment.

3. Investor Confidence Eroded

Continuous price declines and sharp fluctuations may lead some investors to lose confidence and even exit the market. This will further reduce market demand and exacerbate the downward pressure on prices.

4. Impact on the Derivatives Market

The short position volume and funding rates in the futures market may also be affected by selling pressure. If the market is generally bearish, futures premiums may decline, reflecting traders' pessimistic expectations for future price trends.


4. Response Strategies


In the face of severe selling pressure, market participants can adopt the following strategies to respond:

1. Diversified Investment

By diversifying the investment portfolio, the risk exposure of a single asset can be reduced. For example, funds can be allocated to different cryptocurrencies or other asset classes.

2. Long-term Holding

For investors who believe in Ethereum's long-term value, short-term market fluctuations should not affect their holding decisions. Long-term holding often leads to more stable returns.

3. Use of Stop-Loss Orders

Setting reasonable stop-loss orders can help investors exit in a timely manner during sudden market declines, avoiding greater losses.

4. Focus on Fundamentals and Technicals

Closely monitor Ethereum's fundamental developments (such as technical upgrades, community activities, etc.) and technical indicators (such as trading volume, MACD, etc.) to better assess market trends.


5. Future Outlook


Despite the severe selling pressure after ETH broke $4100, Ethereum still possesses significant growth potential in the long run. Here are some positive factors:

1. Advancement of Ethereum 2.0

The development of Ethereum 2.0 is progressing smoothly, expected to bring higher scalability and security. This will further enhance ETH's application value and market demand.

2. Development of DeFi

As the DeFi ecosystem continues to grow, more financial applications will be built on Ethereum, thereby increasing demand for ETH.

3. Participation of Institutional Investors

More and more institutional investors are beginning to enter the cryptocurrency market, incorporating ETH as part of their investment portfolios. This will bring more capital inflow and stability to ETH.


6 Price Trend Analysis

Candlestick Patterns:

Recently, prices around $4000 have shown multiple upper shadows, indicating strong selling pressure. Recent candlesticks are primarily bearish, suggesting a bearish market sentiment.

Technical Indicators:

MACD: In the 4-hour cycle, both DIF and DEA are downward, and the MACD histogram is in the negative region, showing short-term downward pressure. The daily level also shows a dead cross, further confirming the weak trend.

RSI: The 4-hour RSI is close to 40, not entering the oversold zone, but showing some signs of weakness. The daily RSI is slightly above 50, still having room for pullback.

EMA: The current price is below the EMA7 and is gradually approaching the EMA30; if it breaks down, it may test the EMA120 support. Overall, the short-term moving average system shows a bearish arrangement.

Trading Volume: The trading volume significantly increased between December 16 and 17, accompanied by sharp price fluctuations, indicating increased capital activity.

Subsequently, trading volume shrank, indicating a heightened market wait-and-see sentiment, lacking clear directional guidance.