The price of Ethereum has plummeted over the past 24 hours, falling from around $4,300 to around $3,400 before partially rebounding to around $3,800. The move comes on top of one of the largest daily sell-offs of the year, liquidating nearly $19 billion in cryptocurrencies due to the China-US tariff dispute. The sudden plunge wiped out long positions on major exchanges and sent traders rushing to hedge in futures markets.
Ethereum remains down about 13% at press time, but early signs from derivatives and technical charts suggest the selloff may have gone too far and a bounce could be forming beneath the surface.
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The bearish positioning is established, but derivatives suggest a bounce setup.
A collapse of this magnitude rarely begins in the spot market. They start with derivatives, where high leverage magnifies both profits and losses.
Ethereum’s funding rate (the fee traders pay or receive to hold perpetual futures) inverted from +0.0029% on October 9 to -0.019% on October 11.
A negative funding ratio means short traders are paying off long traders, which shows that most open interest is currently betting on further declines.
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Although this imbalance is bearish on the surface, it can also create a reactionary setup. If short selling becomes overloaded, even a small price bounce can trigger short selling pressure, causing traders to buy back their positions and pushing the price higher.
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Second derivative indicators support this view. The Taker Buy Ratio, which measures whether aggressive trading favors buying or selling, recovered from 0.47 to 0.50 over the past 24 hours.
This change means that buyers are now matching sellers in terms of quantity. This is an early sign that sales depletion may be approaching.
The last time this ratio reached a similar level (local high), on September 28, Ethereum rose 13%, rising from $4,140 to $4,680.
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These numbers suggest that the market’s bearish positioning may actually be setting the conditions for a bounce rather than a deeper collapse. Technical charts should reveal more.
Hidden Divergence Strengthens the Case for Ethereum Price Recovery
The Ethereum price chart adds weight to this idea. On the daily time frame, Ethereum shows hidden bullish divergence. This is a pattern that forms when prices make higher lows but the Relative Strength Index (RSI) makes lower lows.
RSI measures momentum on a scale of 0 to 100. Breaking away from the price in this way is a sign that sellers are losing power, even if the price has not yet fully recovered.
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This same setup was seen between August 2nd and October 10th. Ethereum rose by almost 25% in a matter of days from August 2nd to September 25th, when it last printed this signal.
If Ethereum stays above $3,430 (major support), the current bounce setup will remain in effect. A break above $3,810 (another key support) and $4,040 would confirm a near-term recovery, with a target near $4,280 possible, about 13% above current levels.
However, a drop below $3,350 invalidates the structure and returns momentum to the bears. The current Ethereum price crash may have created its own rebound zone.
With short selling becoming overcrowded and technical strength quietly returning, a recovery to $4,280 looks increasingly possible if buyers defend key support. All we need is a daily candle close above $3,810 to regain strength.