Revealed: The reason why ETH encountered severe selling pressure after breaking 4100?

As a leading cryptocurrency, Ethereum (ETH) has attracted widespread attention since its inception. On December 16, 2024, the price of ETH broke through the $4100 mark, reaching a new all-time high. However, this was followed by a significant selling pressure, leading to increased market volatility. This phenomenon has sparked extensive discussions and analysis. This article will explore the reasons and impacts of the severe selling pressure after ETH broke through $4100 from multiple perspectives.
Background of ETH breaking through $4100
Before analyzing the dump, we need to understand why ETH can break through $4100. On December 16, 2024, the price of ETH continued to rise and broke through the $4100 mark. According to Coingecko data, the market value of Ethereum reached $474,009,454,916. This breakthrough is mainly due to several factors:
Increasing market demand: The increasing demand for ETH from institutional investors and individual investors has driven up prices.
The development of DeFi: The rapid growth of decentralized finance (DeFi) applications has also increased the demand for ETH.
Technical upgrade expectations: The smooth development of Ethereum 2.0 has increased market confidence in its future performance.
2. Reasons for throwing pressure
Despite ETH price surpassing $4100, the severe selling pressure that followed mainly stems from the following factors:
1. Profit taking
When the ETH price breaks through $4100, many early holders and short-term speculators choose to take profits. These investors buy low and sell high to make a profit. This behavior is very common in the financial markets, especially after prices rise rapidly.
2. Leveraged Short Liquidation
According to Coinglass data, if ETH breaks through $4100, the cumulative leveraged short liquidation positions will exceed $500 million. This means that a large number of leveraged short positions are being forced to close, further exacerbating selling pressure in the market.
3. Selling pressure caused by unlocking pledged assets
After the Ethereum Shanghai upgrade, validators are allowed to withdraw staked ETH. According to the report by Glassnode analyst Alice Kohn, it is expected that there will be approximately 170,000 ETH dumped after the Shanghai upgrade is completed. This dumping mainly comes from network validators who interact with staking and other addresses.
4. Market sentiment changes
Investor sentiment has changed significantly after the price broke through $4100. Some investors are starting to worry that the price is too high, with limited room for future upside, so they choose to sell their ETH to lock in profits or avoid potential losses.
5. Macro-economic environment
The uncertainty of the global macroeconomic environment also affects the cryptocurrency market. For example, factors such as the Fed's monetary policy adjustments and international trade tensions may trigger market fluctuations, leading investors to reduce their holdings of risk assets, including ETH.
3. The Impact of Stress Release
1. Price correction
Severe selling pressure caused the price of ETH to quickly fall back from above $4100. This price pullback not only affects the profits of short-term investors, but also shakes market confidence.
2. Increased market volatility
The large-scale selling behavior has increased market volatility, making prices more unstable. This is a disadvantage for long-term holders and institutional investors, as they prefer a stable market environment.
3. Investor confidence is frustrated
Continuous price declines and volatile fluctuations may lead to some investors losing confidence and even exiting the market. This will further reduce market demand and exacerbate the downward pressure on prices.
4. The derivatives market is affected
The short positions and funding rates in the futures market may also be affected by selling pressure. If the market is generally bearish, futures premiums may decrease, reflecting traders' pessimistic expectations for future price trends.
4. Response Strategy
In the face of severe dumping pressure, market participants can adopt the following strategies to cope:
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 the long-term value of Ethereum, short-term market volatility should not affect their holding decisions. Long-term holding often leads to more stable returns.
3. Use Stop Loss Order
Setting reasonable stop-loss orders can help investors exit the market in a timely manner when it suddenly drops, avoiding larger losses.
4. Focus on the fundamentals and technicals
Closely monitor the fundamental development of Ethereum (such as technical upgrades, community activities, etc.) and technical indicators (such as trading volume, MACD, etc.) in order to better judge market trends.
V. Future Outlook
Despite the severe selling pressure after ETH broke through $4100, Ethereum still has significant long-term growth potential. Here are some positive factors:
1. Ethereum 2.0 promotion
The development of Ethereum 2.0 is progressing smoothly, which is expected to bring higher scalability and security. This will further enhance the application value and market demand of ETH.
2. Development of DeFi
As the DeFi ecosystem continues to grow, more and more financial applications will be built on Ethereum, thereby increasing the demand for ETH.
3. Participation of institutional investors
More and more institutional investors are entering the cryptocurrency market and including ETH as part of their investment portfolios. This will bring more capital inflows and stability to ETH.
Six Price Trend Analysis
Candlestick pattern:
Recently, there have been multiple upper shadows around the price of 4000, indicating strong selling pressure. The recent K-line candles have mainly shown bearish trends, indicating a bearish market sentiment.
Technical Indicators:
MACD: In the 4-hour cycle, both DIF and DEA are trending downwards, and the MACD histogram is in the negative zone, indicating downward pressure in the short term. The daily chart also shows a death cross signal, further confirming the bearish trend.
RSI: The 4-hour RSI is approaching 40, not yet in the oversold zone but showing some weakness. The daily RSI is slightly above 50 and still has room for a pullback.
EMA: The current price is below EMA7 and is gradually approaching EMA30. If it falls below, it may test EMA120 support. Overall, the short-term moving average system shows a bearish arrangement.
Volume: The trading volume significantly increased between December 16th and 17th, accompanied by sharp price fluctuations, indicating an increase in fund activity.
Subsequently, the trading volume shrank, indicating a growing market wait-and-see sentiment and a lack of clear directional guidance. #ETH🔥🔥🔥🔥#Which DeFi projects do you favor? ##BTC再創新高，後續行情走勢如何？