Market dynamics and recent performance of Ethereum (ETH) on May 4, 2025. Below is a comprehensive analysis and operational suggestions for today's market strategy:

1. Current Market Environment and Key Influencing Factors
1. Expected Technology Upgrade
Ethereum is set to welcome the Pectra upgrade on May 7, which mainly includes increasing the validator staking limit to 2048 ETH, optimizing user experience, and enhancing Layer 2 scalability. If the upgrade goes smoothly, it may attract more institutional funds and increase on-chain activity, providing support for the price.
2. Macroeconomic and Policy Risks
As the Federal Reserve's interest rate decision approaches, the market's sensitivity to expectations of interest rate cuts is increasing, which may trigger short-term volatility. In addition, the heightened correlation between geopolitical tensions (such as trade policies) and traditional financial markets necessitates caution regarding the potential drag on ETH from a weakening U.S. stock market.
3. Fund Flow and Institutional Trends
Ethereum ETF inflows are relatively weak compared to Bitcoin, but BlackRock's ETHA recently set a record for single-day net inflows, indicating some institutional confidence.
On-chain data shows that whale addresses are increasing selling pressure, but the exchange's supply of ETH has dropped to a low level, the proportion of long-term holders is rising, and the overall selling pressure is manageable.
2. Technical Analysis and Key Price Levels
1. Support and Resistance Levels
Key support: Short term $1730-$1750 (at the intersection of the EMA trend line, tested multiple times recently).
Mid-term: $1600 (psychological barrier, breaking below may trigger an accelerated decline).
Resistance level: Upper pressure: $1850-1880 (Bollinger Band upper band and previous high points).
Breakthrough target: If it holds steady at $1850, it may challenge the psychological barrier of $2000.
2. Technical Indicator Signals
Daily level: MACD green bars decreasing in volume, DIF and DEA diverging, indicating that bearish momentum is weakening but has not reversed; RSI is approaching the oversold area, indicating a demand for a rebound.
4-hour level: The Bollinger Bands are narrowing, and the price is oscillating around the middle band, attention is needed on the breakout direction.
3. Operational Strategies and Risk Management**
Short-term strategy (day trading)
1. Bullish Opportunity:
Entry point: If the price stabilizes after retracing to the $1730-1750 range, a small long position can be taken, with a stop loss set below $1700. The first target is $1800, and after breaking through, the target looks to be $1850-1880.
2. Short Selling Opportunities:
Entry Point: If it rebounds near $1850 and meets resistance, consider attempting a short position, with a stop loss set above $1880.
Target: Looking down at $1800, after breaking focus on support at $1750-$1730.
Medium-term strategy (next 1-2 weeks)
Bullish Scenario: After the Pectra upgrade is implemented, if on-chain activity significantly increases and ETF funds continue to flow in, ETH may break through $2000 and test the $2200 resistance.
Bearish scenario: If the upgrade effect is not as expected or macroeconomic headwinds intensify, be wary of a drop towards $1600 or even lower.
4. Risk Warning and Position Management
1. Event Risk:
The Federal Reserve's policy statement (May 5) may trigger volatility, and it is advisable to avoid heavy overnight positions.
Market sentiment before the upgrade is easily influenced by speculation, and it is necessary to guard against the "buy the rumor, sell the news" trend.
2. Position Recommendation:
The short-term position should not exceed 10% of the total funds, while the medium-term layout can be built in batches, with stop-loss strictly controlled between 3% and 5%.
Use options or hedging tools (such as CME Ethereum futures) to reduce risk.
5. Summary and Market Sentiment Observation
Ethereum is currently at a critical turning point, with intensifying technical and fundamental battles. In the short term, it is recommended to adopt a range trading strategy, focusing on the breakthrough direction in the $1730-$1880 range. Medium to long-term investors can pay attention to the ecological performance after the Pectra upgrade and the movement of institutional funds. If the ETH/BTC exchange rate bottoms out and rebounds, it may initiate a new round of upward cycle.
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