Ethereum Crash: Could This Be the Beginning of a Rebound? Or More Tears?

by

The price of Ethereum took quite a tumble in the last 24 hours, plummeting from a lofty $4,300 to as low as $3,400 before making a half-hearted attempt at recovery, now hovering at around $3,800. And what a sight it was, as $19 billion in crypto was wiped out in one fell swoop, courtesy of the ongoing China-US tariff dispute. The catastrophic sell-off saw long positions evaporate, leaving traders scrambling to hedge their bets in the futures market. Oh, the drama! 🎭

Although Ethereum is still down by a respectable 13% at the time of writing, some early signs from derivatives and technical charts suggest that the sell-off may have gone just a touch too far. Perhaps, dare we say, a rebound could be lurking just beneath the surface, waiting to make its grand entrance? 🤔

Bearish Sentiment Soars, Yet Derivatives Whisper of a Rebound

Ah, crashes of this nature don’t typically commence in the spot market. No, they begin in the dark, mysterious world of derivatives, where leverage makes both gains and losses look like the heights of drama. 🎭

Ethereum’s funding rate – that curious fee traders pay or receive to hold perpetual futures – flipped faster than the plot of a good romance novel, from +0.0029% on October 9 to -0.019% by October 11.

A negative funding rate? You may ask. Why yes, indeed! It indicates that short traders are now paying long traders. Most open interest is now betting on further declines. However, while this imbalance paints a rather grim picture on the surface, it could also create the ideal conditions for a rebound. How? Well, when shorts become overcrowded, even a modest price bounce can send them running to cover their positions, which, in turn, pushes the price back up. Classic! 😏

Craving more juicy crypto insights? Do yourself a favor and sign up for Editor Harsh Notariya’s Daily Crypto Newsletter here. You won’t regret it! 😉

A second derivative metric is also on our side. The taker buy ratio – which measures whether aggressive trades favor buying or selling – has bounced from 0.47 to 0.50 in the past 24 hours. Now that buyers are matching sellers in volume, we may be witnessing an early sign that the selling frenzy is, in fact, losing steam. Hallelujah! 🙌

The last time this ratio hit a similar level (a local peak) was on September 28, and what followed? Ethereum surged 13%, moving from $4,140 to $4,680. Could history repeat itself? Let’s keep our fingers crossed! 🤞

These indicators combined suggest that, while the market might be leaning bearish, the stage could very well be set for a recovery rather than a further plunge. The technical charts will reveal all, or at least some of the juicy details. 🤓

Hidden Divergence: Ethereum’s Secret Weapon for a Comeback?

Let us now turn our attention to the Ethereum price chart. Oh, the wonders it reveals! On the daily timeframe, Ethereum is showing a hidden bullish divergence, a pattern that emerges when price makes a higher low, but the Relative Strength Index (RSI) forms a lower low. It’s like a plot twist in a novel. 📚

The RSI, that trusty momentum indicator, measures strength on a scale of 0 to 100. When it diverges from the price in this manner, it signals that sellers may be losing their grip, even if prices haven’t fully bounced back yet. Intriguing, isn’t it? 🧐

From August 2 to October 10, a similar setup emerged. The last time Ethereum printed this signal, from August 2 to September 25, it climbed nearly 25% within days. Impressive, no? Let’s hope lightning strikes twice. ⚡

If Ethereum manages to hold above $3,430 (a crucial support level), this rebound setup remains intact. A breakthrough above $3,810 (another key support) and $4,040 would confirm a short-term recovery, with a possible target near $4,280 – a sweet 13% higher than where it stands now. Fingers crossed! 🤞

Of course, if Ethereum drops below $3,350, the bullish case would be invalidated, and the bears would regain control. But for now, it seems the Ethereum price crash may have inadvertently set the stage for its own rebound zone. 🧐

With shorts overcrowded and technical strength gradually returning, a recovery toward $4,280 seems more likely than ever, provided that buyers defend the key support levels. All that’s needed now is a daily candle close above $3,810, and the strength shall return! 💪

Read More

2025-10-11 11:07