“Interest rate cuts are not a remedy; they are like pouring ice coffee on an overheated market — This morning, the Federal Reserve's hawkish rate cut directly rubbed ETH's bulls against the floor at 3400.”
At three o'clock in the morning, the moment the Federal Reserve made its decision, I knew something was going to happen just by looking at the 4-hour candlestick chart: a 25 basis point cut was expected, but the dot plot suddenly said 'one less cut next year', which is like going to a bar and just opening a bottle of wine, only for the owner to tell you 'this is the last bottle, we close after this' — the market's hopes for easing were instantly dashed. Sure enough, ETH surged to 3446 along with BTC, just touching the 100% Fibonacci resistance level, only to be smashed down into 'free fall' by large sell orders, plunging 120 dollars within half an hour, crushing over 110,000 long positions that chased the high this morning.
This wave of market movement is not 'unexpected', it is the main force using the news to stage a 'trap to kill the pigs'. You look at the RSI and KDJ in the 4-hour chart, they had already touched the overbought zone yesterday afternoon, and the red bars of MACD have also begun to shrink — this clearly shows that 'the bulls are losing strength', but retail investors rush in because they are fixated on the words 'interest rate cuts'. It was even more interesting when I checked the on-chain data this morning: the ETH reserves on exchanges have dropped to a historical low of 8.7%, which should mean selling pressure is small, but that wave of selling last night was clearly a whale quietly moving their locked assets back to the exchanges — what else could it be but 'raising the price to sell'? Just like last week when SOL was pushed to 150, institutional addresses suddenly had a net outflow of 20 million coins, and the next day it plummeted by 15%, all following the same pattern.
What’s even tougher is the Federal Reserve's 'hawkish' rhythm this time. Last year when rates were cut, the market was 'buying expectations and buying facts', but this year it has directly turned into 'buying expectations and selling facts' — essentially, the market's expectations about the 'ceiling of easing' have changed. You see Standard Chartered Bank has cut its BTC year-end target from 200,000 to 100,000 today, which is not just bearish, it is telling institutions 'don’t expect that easing can continuously feed the crypto market'. The weakness of ETH today actually reflects the entire risk asset market: the Nasdaq futures in the US surged 0.8% in the early morning before falling back, and gold also dropped from 2100 USD — in this high-volatility crypto market, emotions always lead the way first, then reality pulls it back.
However, I think today's plunge may not necessarily be a bad thing. The 3200 level for ETH is supported by the 50-day moving average, and 3150 is the upper bound of the previous fluctuation range. As long as these two levels hold, it can actually clean out the floating positions of those who chased the highs. Just like last month when BTC dropped to 80,000, the net outflow from exchanges reached a new high, and within two days it rebounded to 90,000 — now the retail holding cost for ETH is above 3350, as long as the main force does not break 3150, it can turn this wave of locked positions into subsequent 'passive longs'.
Before going to bed tonight, I will take another look at the support of the 20-day moving average: if the 4-hour close tonight can stand back at 3300, there might be an opportunity to rebound to 3400 tomorrow; if it breaks below 3200, it is very likely to test the 3000 mark. To be honest, after five years in the crypto space, I increasingly feel that 'news is an amplifier of emotions, while technicals are the main force's trump card' — just like today's wave, if you focus on 'interest rate cuts' and rush in, it is better to check if KDJ is overbought and if there are any significant movements from whales on-chain.
By the way, there will be US CPI data tomorrow morning. If inflation exceeds expectations, ETH might take the opportunity to rally under the pretext of 'safe haven'; if it is below expectations, it may instead drop again because 'the Federal Reserve doesn't need to rush to cut rates'.
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