ETH market plummets: Macroeconomic turmoil and technical liquidation trigger severe fluctuation.

Event Review 📉

In the early hours of May 19, 2025, the ETH market experienced a violent fluctuation. Initially, the news kept brewing: the downgrade of the U.S. sovereign credit rating, Moody's announcement to remove the last AAA rating, along with ongoing macroeconomic negative signals such as adjustments in China-U.S. trade policies, greatly shook investor confidence. Meanwhile, high-leverage trading and a large number of technical stop-loss orders were triggered, creating a chain reaction of liquidations, causing the ETH price to plummet rapidly in a very short time.

Timeline ⏰

00:44 — News has emerged that the U.S. sovereign credit rating has been downgraded, and macroeconomic uncertainty is beginning to rise.

00:55 — Moody's officially downgrades the U.S. credit rating, raising significant market concerns over debt risks and fiscal issues.

01:00 — ETH price hovers around $2573–$2574 high, with traders generally in a high leverage position, and key support level nearby.

01:56 — In just 56 minutes, the price of ETH plummeted to about $2487, a decrease of 3.39%, triggering a large number of stop orders.

02:20 — Under continued selling pressure, the ETH price further dipped to $2449, with a cumulative decline of nearly 4.82%, and the risk of technical liquidation has further emerged.

02:25 — The market has briefly stabilized, with ETH rebounding to around $2472.55. Some funds are buying on dips, but the overall oscillating situation has not yet been resolved.

Reason Analysis 🔍

The recent significant fluctuations are primarily driven by the following factors:

Macroeconomics and Policy Shocks

The downgrade of the US credit rating and the government debt issue have made the market deeply concerned about the economic outlook.

The adjustment of trade policies between China and the United States has increased uncertainty in the global economy, leading to heightened risk-averse sentiment among investors.

Chain liquidation triggered by leveraged positions

When trading at high levels, many investors set tighter stop-loss orders.

Once the price breaks below a key support level (such as EMA52), it triggers a large number of forced liquidations, creating a chain liquidation effect that accelerates the price decline.

Technical selling and emotional shift

Key technical indicators show negative signals, and the comparison of long and short forces has sharply deteriorated.

The explosion report and large transaction data further corroborate the spread of market panic, leading to an intensification of capital outflows.

Technical Analysis 🛠

Based on the 45-minute K-line data of ETH/USDT perpetual contracts on Binance, this technical analysis shows:

Short-term moving average:

EMA5 crosses below EMA10, forming a death cross, indicating that downward pressure will continue to increase in the short term.

Momentum Indicator:

The MACD shows a death cross, and the sell signal is clear.

The %B indicator has fallen below 0.2, indicating that the price is close to the lower band, and the market is experiencing an oversold condition.

The J value is extremely oversold, suggesting a possibility of a short-term rebound, but the extent and strength remain uncertain.

Other technical indicators:

The KDJ indicator is diverging, and the bullish momentum is clearly weakening.

The OBV indicator has fallen below the previous low point and has turned from positive to negative, indicating strong selling pressure and significant capital outflow.

Volume Analysis:

Trading volume surged by 222.41%, but prices plummeted significantly, confirming the state of panic selling in the market.

The current trading volume is significantly higher than both the 10-day and 20-day averages, indicating an unusual level of trading activity; however, this level of activity is often accompanied by high risks.

Market Outlook 🚀

The current ETH market is in an oversold state, and some technical indicators suggest a possible rebound in the short term, but the overall outlook remains full of uncertainty:

Short-term view:

Some buying on dips may lead to a slight price rebound, but if macro headwinds continue to ferment or key support levels are breached, the downward trend may persist.

Mid-term Analysis:

As the ongoing fermentation of financial and debt issues in the United States continues, coupled with global economic uncertainty, market volatility is expected to remain high. Traders need to be wary of the risks of chain liquidations while also keeping an eye on future policy trends.

Long-term strategy:

Investors should focus on risk management, timely adjusting their positions to avoid the continuous liquidation risk brought by high leverage trading. Looking for reversal signals and confirming bottom signs will be important criteria for future positioning.

Overall, the sharp fluctuations in ETH this time are not only due to technical liquidations and a sudden shift in market sentiment, but also reflect the profound impact of the global macroeconomic environment on the crypto market. In the face of these multiple negative pressures, maintaining caution and a flexible response will be a principle that every trader must adhere to.