Ethereum Price Driven by Futures Positions Faces Downside Risks

Matrixport, a prominent digital asset financial services platform, has released a daily analysis highlighting the current dynamics of the Ethereum market. The analysis underscores that while Bitcoin has attempted to rebound, the likelihood of a sustained breakthrough is low, given the seasonal trend. For Bitcoin to maintain technical validity, it needs to hold above $105,000. However, the primary concern lies with Ethereum, which has seen its price driven mainly by futures positions rather than fundamental support.

According to Matrixport's analysis, the current price of Ethereum is largely influenced by leveraged traders, making it more susceptible to downside risks. This position risk is cited as the reason behind the sharp drop in Ethereum's price over the past few days. With market leverage still at high levels, there remains a significant probability of continued price pressure in the future. The analysis warns that the absence of fundamental support for Ethereum's price increases the vulnerability to market fluctuations and potential corrections.

The cryptocurrency market has experienced a volatile downward trend this week, with Bitcoin continuing its decline and altcoins following suit. The market sentiment index dipped slightly from 30% to 28%, indicating a bearish sentiment. Despite this, the stablecoin market maintained its upward trend, with USDT and USDC showing slight increases. USDT's market value reached $155.7 billion, with a weekly increase of 0.32%, while USDC's market value stood at $61.4 billion, up 0.33%. The increase in USDC's market value suggests that funds from investors are beginning to re-enter the market, although the inflow amount is not large.

The market's performance was divided, with Bitcoin maintaining a volatile downward trend while altcoins suffered a sharp decline. This differentiation reflects the risk-averse nature of funds concentrating on relatively safe assets in an uncertain environment, highlighting Bitcoin's status as a safe haven for cryptocurrencies. Geopolitical risks escalated as the conflict between Israel and Iran continued to intensify, with the US military deployment around Iran increasing. This geopolitical tension directly impacts risky assets through the path of declining risk appetite, with cryptocurrencies, especially altcoins with relatively poor liquidity, being the first to be hit.

The Federal Reserve's stance became more hawkish, with the interest rate kept at 4.5% as expected. However, the minutes showed a subtle change in the attitude of policymakers, with the number of officials who would not cut interest rates increasing to 7. This shift in expectations directly hit the markets expectations for liquidity easing. The Federal Reserve also lowered its growth expectations and raised its inflation expectations, further exacerbating market pessimism.

Despite these challenges, there were positive policy factors. The GENIUS Act was passed by a large margin in the U.S. Senate, providing policy support for the development of the cryptocurrency industry. Finance Minister Bessant expects the stablecoin market to reach $3.7 trillion by the end of 2029, injecting confidence into the long-term development of the cryptocurrency ecosystem. However, the boosting effect of positive factors is relatively limited under the dual pressure of geopolitical risks and tightening monetary policy.

Investors are advised to remain highly cautious, focus on the development of geopolitical events, appropriately control their positions, and guard against sudden risk events that may cause major impacts on their investment portfolios. The cryptocurrency market will continue to face severe challenges in the coming week, with the further escalation of geopolitical conflicts and the possibility of military intervention continuing to push up global risk aversion. Coupled with the expectation of monetary policy tightening strengthened by the hawkish stance of the Federal Reserve, Bitcoin is expected to find a difficult balance between its safe-haven attributes and risky asset characteristics, while altcoins may face greater selling pressure and liquidity depletion risks. Under the multiple pressures of key technical support levels facing tests, institutional funds remaining cautious, and retail panic sentiment that may further ferment, the market is at risk of flash crashes and chain reactions. Investors should adopt a defensive strategy, strictly control positions and leverage, pay close attention to geopolitical dynamics and important economic data, and guard against violent market fluctuations caused by emergencies.