The crypto market is never short of drama. Just moments ago, Ethereum (ETH) was basking in the glory of its attempt to hit new all-time highs, only to be plunged into a shroud of panic by a deep correction shortly after. A drop of over 30%, wave after wave of liquidations, and a barrage of macro-narratives (like tariffs) have left many investors’ confidence in tatters. On social media, narratives of “the bull market is over” and “the despair cycle is here” are running rampant.
Yet, when the tide of emotion recedes, can we pierce through the market’s noise to see the deeper logic behind the charts? Before this latest plunge, many seasoned analysts had already predicted this very scenario. Today, we set aside panic and fleeting hype. We return to technical analysis, cyclical patterns, and a calm discussion: After hitting a critical “bull market support band,” what’s the next move in Ethereum’s grand chess match?
A Validated Script: The 30% Correction Was No Accident
A analyst presents a core viewpoint: The market is reenacting a script that has been staged before. After a powerful breakout, a correction of around 30% in Ethereum is a classic wave pattern in a long, powerful bull market—the process of “climax, rejection, pullback, and re-accumulation.”
From a technical standpoint, this decline has precisely retraced to a powerful support zone formed by the logarithmic regression trendline and the 20-week moving average (SMA). More importantly, in its valuation against Bitcoin (ETH/BTC), Ethereum found support right at its 20-week SMA. This is a crucial technical signal, as it suggests the selling pressure for ETH relative to its “big brother” is exhausting, or at the very least, ETH is showing more resilience than most other altcoins.
A Data-Driven Look at a Cruel Reality: Structural Market Divergence
A thought-provoking phenomenon is that while Ethereum attempts to form a “higher low” on its Bitcoin chart, the broader altcoin market (nearly all other alts besides ETH) has already carved out “lower lows” on their Bitcoin pairs (e.g., ADA/BTC, SOL/BTC).
- Total Market Cap (excluding USDT) vs. Bitcoin: Has fallen to 29% of Bitcoin’s market cap, and even 25% when USDC is excluded, hitting a key historical bottom target.
- Total Market Cap of Other Alts vs. Bitcoin: Plunged to as low as 0.08, a level last seen during the December 2020 cycle bottom.
This set of data reveals a harsh, sobering reality: Ethereum and other altcoins are undergoing a clear “valuation divergence.” Many influencer analysts used to shout “Alt Season is coming!” at every minor rally. The truth, however, is that investors who have been “HODLing” through the altcoin bear market for years now potentially need several hundred or even a thousand percent rallies in alts just to break even on their Satoshi valuation.
This structural divergence gives us a solid reason to believe Ethereum has stronger relative defensive capabilities than other alts, which is the core logic behind the analyst’s conviction that it has a better chance of bottoming first and leading the market to new highs.
From “The End of the Drop” to “The Start of a New Rally”:
My Base Case and Risk Management Plan
If technical signals and historical patterns all point in one direction, what is the rational response?
1. Base Case: ETH Rebounds to New All-Time Highs The analyst clearly states that after Ethereum’s 30% drop and the confirmation of support, his Base Case is: Ethereum will establish a bottom here and launch a rebound, ultimately challenging and creating new all-time highs. The logic behind this is:
- Bull Market Fundamentals Intact: As long as the Bitcoin bull cycle isn’t over, it’s highly probable that the second-largest crypto asset, Ethereum, will eventually follow Bitcoin to new highs.
- Market Rotation Effect: Bitcoin and Ethereum’s leading rallies often persist for a long time, while the explosive “Alt Season” typically occurs after their second major impulse wave.
2. Risk Management (Plan B): Bitcoin’s “50-Week SMA” Early Warning System No analysis is 100% correct. A mature trader must set clear “stop-losses” or “risk management triggers” for their thesis.
The key risk indicator the analyst provides is: the weekly closing price of Bitcoin falling below its 50-week moving average. This has been a historically reliable bull/bear demarcation line.
- Trigger Signal: If, in the coming weeks, Bitcoin’s weekly closing price closes two weeks in a row (to prevent a “false breakout”) below its 50-week SMA, it means the analyst will admit his thesis is wrong and the bull market top may already be in.
- Contingency Plan: At that point, he would abandon his bullish stance and wait for the next bear market to conclude.
Historically, every time Bitcoin has closed below the 50-week SMA on the weekly chart, it has invariably marked the end of the prior bull market. Therefore, while the analyst is currently bullish on ETH, he maintains a healthy respect for this risk signal.
The Key of October: Bitcoin’s Dominance and Market Rhythm
An interesting historical pattern is that Bitcoin’s Dominance (BTC.D) tends to strengthen in October. Looking back at 2017 and 2020, historical data shows that every October, capital flows back from altcoins into Bitcoin, causing the BTC.D index to spike, sometimes even hitting the 64% level.
If this historical pattern repeats, it means that in the coming weeks, the market’s theme will be “Bitcoin leading the charge,” and altcoins, including Ethereum, are likely to continue facing pressure or trading sideways, waiting for Bitcoin to confirm its upward trend. This explains why, despite ETH showing strength in relative value, the analyst remains cautious, suggesting its low might not be fully in place. Only when Bitcoin shows enough strength and makes another run at new highs will capital truly begin to rotate into Ethereum and other assets.
FlashID: Guarding Your Digital Asset “Islands” in the Turbulent Crypto Sea
During this volatile market swing, we’ve witnessed the power of technical analysis and the ever-present nature of risk. Corrections, liquidations, and asset rotations test every investor’s strategy and mental fortitude. However, beyond market risk, there is a risk that is often overlooked: “Correlation Risk.”
When a crypto project faces a severe issue (e.g., a hack, a rug pull), or if your assets are mistakenly linked to a high-risk address, all the related tokens you hold could potentially plummet to zero overnight. This “all for one, one for all” correlation is akin to putting all your eggs in a few interconnected baskets.
In the world of digital assets, every investor should possess their own independent, secure “asset islands.” FlashID is the ultimate tool for building these islands. It creates a completely isolated digital identity (unique IP address, browser fingerprint, device environment) for each wallet or exchange account, ensuring that every address you operate appears online to be from completely different, unrelated users.
This means that even when you manage multiple addresses for trading, staking, participating in liquidity mining (DeFi), or using various Web3 testnets, you don’t have to worry that these activities will “collude,” causing platforms or on-chain analytics to attribute them to a single owner, thereby triggering unnecessary scrutiny or risk. This kind of identity isolation acts like a separate firewall for each of your core assets, allowing you to enjoy the benefits of a diversified asset portfolio while maximizing the isolation from the impact of single-point risks.
Navigating the crypto sea requires steady hands and a clear head. While analyzing market trends and formulating macro-strategies, don’t neglect to secure the “safe room” for your core digital assets. This is precisely the mission of FlashID—to provide you with a solid, reliable, and secure digital identity foundation amidst the stormy waves of the market.
Frequently Asked Questions (FAQ)
Q: What’s the fundamental reason for Ethereum’s recent drop? Is it due to macro news like tariffs?
A: The article’s viewpoint is that macro news (e.g., tariffs) is merely a narrative used to explain the drop after the fact, not the root cause. The fundamental reason is more likely related to market cycles, profit-taking, and a natural retracement after hitting technical resistance levels.
Q: What exactly is the “bull market support band,” and why is it so important?
A: It typically refers to key technical levels like the logarithmic regression trendline and the 20-week moving average. These are seen as powerful psychological and technical support zones because price has historically found strong buying interest and rebounded from these levels in past cycles.
Q: Why does the analyst believe ETH will be stronger than other altcoins (Alts)?
A: Because during this recent downturn, the ETH/BTC chart is forming a “higher low,” while the charts of most other alts/BTC have already formed “lower lows,” indicating that ETH is displaying stronger relative resilience.
Q: Why is the “50-week moving average” of Bitcoin considered such a critical bull/bear dividing line?
A: Because it’s a trend-following indicator that has been repeatedly validated by historical data. A decisive weekly close below it usually signals a long-term trend reversal and is considered a reliable signal for the onset of a bear market.
Q: If the analyst’s bullish view is correct, will ETH shoot directly to new highs, or will it consolidate again?
A: While the base case is an upward trend, the article also mentions that based on the historical pattern where Bitcoin dominance tends to strengthen in October, ETH could experience further volatility or even retest its lows before the timing is right.
Q: As a retail investor, should I be buying the dip in ETH now?
A: The article does not constitute investment advice. The rational approach is to understand the underlying logic, consider your own risk tolerance and capital management strategy, and set your own stop-loss points (e.g., referencing Bitcoin’s 50-week SMA).
Q: What is “Bitcoin Dominance” (BTC.D), and how is it useful in market analysis?
A: It refers to the proportion of Bitcoin’s market capitalization to the total market capitalization of the entire crypto market. Its rise often indicates capital flowing into Bitcoin (the “altcoin season” is dead), while its fall might herald the coming of an “Alt Season.”
Q: Besides analyzing ETH/BTC, what other indicators are helpful for judging Ethereum’s trend?
A: In addition to ETH/BTC, you can monitor the ETH/USD price action, on-chain metrics (like active addresses, exchange net inflow), and overall market sentiment indicators (like the Fear & Greed Index).
Q: How does using FlashID solve the “correlation risk” mentioned in the article?
A: Because FlashID creates a separate, unique digital identity (IP, browser fingerprint, etc.) for each account, it causes these accounts to appear to be operated by completely different users from the perspective of on-chain platforms or analytics, thereby severing the physical and digital links between accounts and avoiding the risk of “contagion” if one account is compromised.
Q: Besides security, what are the other benefits of using FlashID for multi-account management?
A: The biggest benefit is efficiency and automation. With its window sync and RPA features, users can efficiently manage dozens or even hundreds of accounts from a single software interface, automatically performing repetitive tasks (like interactions, voting, claiming airdrops), etc., which greatly saves time and labor costs, making it an essential tool for scalable operations.
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