August 15, 2025 Market Analysis
The cryptocurrency market experienced a brief yet sharp downturn last night, resulting in significant liquidations in the futures market. While not the most substantial pullback since Ethereum's inception, the liquidation volume stands out as the largest to date, warranting careful examination.
From a price perspective, Ethereum saw a maximum decline of 7%, touching a low of $4,450. This swift drop effectively eliminated highly leveraged long positions. According to Gate's liquidation data, the past 24 hours witnessed approximately $1 billion in liquidations, with bulls bearing 80% of the losses. Notably, one-third of the liquidation volume concentrated within the $4,461-$4,551 range for Ethereum.
This event can be interpreted as a forceful counteroffensive by bearish traders and a critical juncture for bullish investors. The resistance zone around $4,800-$5,000 is pivotal; a breakthrough could pave the way for further gains, while failure might lead to stagnation or even jeopardize the bull market's new highs.
Temporally, yesterday's decline was primarily influenced by the U.S. Producer Price Index (PPI) data. Both month-on-month and year-on-year PPI figures showed unexpected increases. This core inflation indicator directly impacted expectations for potential interest rate cuts in September, triggering the market's sudden flash crash.
Having identified the catalyst, this news-driven impact could be viewed as a healthy market correction. It suggests that the sharp decline was not due to active selling within the cryptocurrency ecosystem but rather a broader market response to economic data, simultaneously clearing out recent overenthusiastic bulls.
Drawing from personal experience, I've set several key indicators for this market cycle. One such indicator is the liquidation volume during sharp declines in a bull market. I consider $1.5 billion as a risk threshold; surpassing this level would prompt me to significantly reduce my position preemptively. The current round has not yet reached this risk value.
Given the market's high expectations for breaking through $4,868 yesterday, it's often reasonable to expect a pullback and deleveraging at such junctures. The most plausible scenario seems to be that major players, in light of the PPI data, conducted a round of long liquidations to clear resistance for an impending breakthrough. A slight corroboration of this theory is that BTC's price rebounded to around $120,000 as I penned this analysis, avoiding a breakdown.
Objectively, the $1 billion liquidation volume should serve as a cautionary signal. As mentioned previously, we're entering a phase of cautious optimism without taking outsized positions. Those who haven't built substantial positions during the market lows should avoid chasing prices indiscriminately. Consider implementing a dollar-cost averaging strategy or focusing on arbitrage opportunities.
Personally, I plan to reduce my position from 70% to 60% when the index reaches 5,000 points. For instance, I managed to capture some gains during yesterday's pullback, which positively impacts my trading psychology. If the market breaks through 5,000, I'll continue reducing my position incrementally, such as by 10% for every 1,000-point increase. This approach ensures I maintain some exposure even at 10,000 points, and combined with intermittent profits, could result in an average reduction price of 7,000-8,000 for the entire position.
Remember, this is a personal strategy, and traders should tailor their approaches based on individual return expectations and trading habits. As always, exercise caution and conduct thorough research before making any investment decisions in the volatile cryptocurrency market.