The price of Ethereum experienced a significant decline in the last 24 hours, plummeting from approximately $4,300 to nearly $3,400 before making a partial recovery to around $3,800. This movement coincided with nearly $19 billion in cryptocurrency liquidations, marking one of the largest single-day sell-offs this year, driven by the China-US tariff situation. The sudden market drop liquidated long positions on major exchanges and prompted traders to quickly hedge in the futures markets.
Although Ethereum remains down about 13% at this time, initial signals from derivatives and technical charts indicate that the sell-off might have been excessive — hinting at a possible rebound forming behind the scenes.
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Bearish Positioning Builds, But Derivatives Hint at a Rebound Setup
Large sell-offs of this nature typically begin in the derivatives market, where substantial leverage amplifies both profits and losses.
Ethereum’s funding rate — the fee that traders pay or earn to maintain perpetual futures — dropped from +0.0029% on October 9 to –0.019% by October 11.
A negative funding rate indicates that short traders are compensating long traders, suggesting that most open interest is now betting on further declines.
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This imbalance, while appearing bearish, may also create a setup for recovery. When short positions become too crowded, even a minor price increase can trigger a short squeeze, forcing traders to buy back their positions, consequently driving prices up.
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A second derivative metric backs this perspective. The taker buy ratio, which assesses whether aggressive trades lean towards buying or selling, has risen from 0.47 to 0.50 in the past 24 hours.
This increase indicates that buyers are now matching sellers in volume — an early sign that selling pressure may be diminishing.
The last time this ratio reached similar levels (a local peak), on September 28, Ethereum surged by 13%, moving from $4,140 to $4,680.
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Collectively, these indicators imply that the current bearish positioning in the market might actually be setting the stage for a rebound instead of a deeper decline. The technical charts should provide further clarity.
Hidden Divergence Strengthens the Ethereum Price Recovery Case
The Ethereum price chart reinforces this concept. On the daily timeframe, Ethereum exhibits a hidden bullish divergence — a pattern emerging when the price creates a higher low, while the Relative Strength Index (RSI) registers a lower low.
RSI tracks momentum from 0 to 100. When it diverges from price in this manner, it indicates that sellers are losing strength, even if prices have not entirely recovered.
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From August 2 to October 10, this identical configuration appeared. The last time Ethereum manifested this signal, between August 2 and September 25, it surged nearly 25% within a matter of days.
Should Ethereum maintain a position above $3,430 (key support), the existing rebound setup remains intact. Breaking above $3,810 (another crucial support) and $4,040 would confirm short-term recovery, targeting around $4,280 — roughly 13% higher than current levels.
A drop below $3,350, however, would invalidate this structure and shift momentum back to bearish forces. For now, the Ethereum price crash may have resulted in its own rebound zone.
With the short positions saturated and technical strength subtly returning, a revival towards $4,280 appears increasingly plausible if buyers protect key support levels. A daily candle close above $3,810 is all it will take for the strength to re-emerge.
