The current LUNC spot market is in an extreme panic one-sided downward trend, with prices plummeting by 33.8% within 24 hours, having reached the lower Bollinger Band, indicating technical overselling. The contract market has also plummeted sharply, with trading volume sharply shrinking, and the funding rate turning negative, showing that bearish sentiment is dominant, and market liquidity is at risk of exhaustion.
Key prices and range structure
1. Value anchoring zone: According to VPVR data, the current market value anchoring zone (Value Area) is from 0.05117 to 0.07104, with POC (Point of Control) at 0.05552. The current price of 0.05039 has fallen below the lower edge of the value area (VAL), indicating that market sentiment is extremely pessimistic, and it has entered the oversold area in the short term. POC (0.05552) will become the first strong resistance level for price rebound.
2. Trend and Volatility Range: The current price 0.05039 is far above MA200 (0.03652), indicating that the medium to long-term upward trend has not been disrupted. However, prices have fallen near the lower band of the Bollinger Bands (0.04889), and the Bollinger Bands position shows 8.2%, in a state of extreme compression, suggesting strong short-term downward momentum, and volatility may amplify at any time.
3. High Trading Volume/Concentration Area (HVN): The area where the POC is located at 0.05552 is a clear high trading volume area (HVN), and prices are expected to encounter significant selling pressure upon rebounding to this level. Additionally, the entire Value Area (0.05117-0.07104) is a relatively dense area of positions, and for prices to repair upwards, continuous volume increase is required to break through.
Derivatives and Liquidity Analysis
• Leverage and Sentiment: The funding rate is -0.00006791. Although it is negative, the absolute value is not large, indicating that short positions dominate the contract market but have not reached extreme overcrowding. The long-short ratio has risen from 0.8614 to 1.0742, showing that some funds tried to bottom fish during the plunge, but overall sentiment remains weak.
• Liquidity Signal: The contract trading volume changed by -64.3%, resulting in a sharp drop, while the open interest (OI) is 23.16M USDT. A sharp contraction in trading volume accompanied by a price drop is a typical signal of liquidity exhaustion, indicating a reduction in market participants, making prices susceptible to large orders, and increasing volatility risk.
• Leverage Environment Recommendation: The current environment is extremely unsuitable for high leverage. Under a collapse in trading volume and severe price fluctuations, high leverage is likely to be liquidated due to insufficient liquidity or price flash crashes. It is recommended to observe or use extremely low leverage while waiting for trading volume recovery and market sentiment stabilization.
News and Event Impact
Currently, there are no major news events. The severe price fluctuations may be driven by internal market deleveraging, large holders selling off, or purely technical factors following a general market correction.
Trading Strategy
Plan 1: Conservative Bottom-Fishing Plan (Left-Side Trading, High Risk)
• Direction: Light position to try going long.
• Entry Range: 0.0489 - 0.0500 (near the lower band of the Bollinger Bands).
• Stop-Loss Level: 0.0475 (below the lower band of the Bollinger Bands and a new low).
• Target Level: 0.0555 (POC/high trading volume resistance area).
• Expected Profit/Loss Ratio: Potential profit (0.0555 - 0.0495 = 0.0060), potential loss (0.0495 - 0.0475 = 0.0020), profit/loss ratio approximately 3.0:1.
Plan 2: Aggressive Breakthrough Plan (Right-Side Confirmation, Medium Risk)
• Direction: Go long.
• Entry Condition: Price volume increases (significantly amplified trading volume) stabilizing above the lower edge of the value area (VAL) at 0.0512.
• Stop-Loss Level: 0.0495 (falls back below the entry candlestick low).
• Target Level: First target 0.0555 (POC), second target 0.0600 (upper part of the Value Area).
• Expected Profit/Loss Ratio: Based on entry price 0.0515 and stop-loss 0.0495, potential profit (0.0555 - 0.0515 = 0.0040), potential loss (0.0020), profit/loss ratio approximately 2.0:1.
Risk Warnings and Position Management
1. Liquidity Exhaustion Risk: The trading volume of the contract has plummeted by 64.3%, with extremely poor market depth, making prices prone to irrational slippage and flash crashes; stop-loss orders may not be executed at preset prices.
2. Trend Continuation Risk: Although prices are oversold, the downward trend is strong, and the lower band of the Bollinger Bands may be breached, leading prices to further test the MA200 (0.0365) for support; bottom-fishing may encounter falling knives.
3. Position and Risk Control Recommendations:
• Absolutely prohibit high leverage: Given the liquidity risks, it is recommended to use low leverage not exceeding 5 times, or only use spot positions.
• Gradual Position Building: If executing Plan 1, a pyramid-style gradual buying approach should be adopted, for example, building positions in three batches at 0.0500, 0.0490, and 0.0480, with each batch decreasing in size to average costs.
• Total Position Limit: The risk exposure of a single trade should not exceed 1%-2% of total funds. In the current extreme volatility environment, total positions should not exceed 10% of account principal.
• Active Management: If prices rebound weakly and continue to hover below 0.0512 (VAL), or if trading volume remains low, positions should be actively reduced or exited to wait for clearer signals.
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