Crypto flash-crashed overnight, with many coins dropping more than 10%. Understandably, emotions are running high. But while most people are panicking, I’m taking the other side.
I think Ethereum bottomed today and now we're about to have an absolute face-ripper into the back half of the year.
What we just witnessed wasn’t the start of a deeper trend, but a textbook liquidation cascade. In plain terms, too many traders got greedy, piled into leveraged bets, and when the market moved against them, their positions were automatically liquidated.
More than $1.7 billion worth of positions were wiped out overnight, the largest single liquidation event of the entire year.
The selling pressure wasn’t driven by new bearish fundamentals. It was caused by leverage being flushed out of the system. Traders weren’t selling because they wanted to, they were being forced out.
These big waves of long liquidations mark major bottoms. It’s almost like clockwork: the crowd gets wiped out, sentiment turns sour, and that clears the path for the market to rally. Our job as market participants is to recognize this pattern and to punish their stupidity by taking the other side.
I've seen this exact setup before. Back in May, I told my members I was buying Ethereum just after a similar liquidation event. That trade worked. Then again in June, when Ethereum went through the same thing, I doubled down. Both times, the setup was almost identical to what we’re seeing now.
Look at what’s happening today:
Ethereum dropped hard to start the week.
Funding rates have flipped negative. This means traders who had been long with leverage got wiped out, which drove futures prices below their fair value. That’s often a sign of capitulation.
On top of that, today marked Ethereum’s highest single day of long liquidations ever.
Here it is on the chart
Put all of that together, and you get what I see as the perfect storm for a reversal. This kind of positioning reset is exactly what fuels violent rallies. The crowd tried to front-run the move with leverage, they got wrecked, and now the market is clean for a face-ripping move higher into the back half of the year.
I think Ethereum bottomed today. The herd just got flushed out. Now it’s our turn to step in, punish their stupidity, and profit from it.
From where the sun rises first,
Louis Sykes Senior Crypto Analyst, All Star Charts
