Ethereum's 24-hour scare: Behind the price big dump of 13%, the derivation market shows a rebound "hidden signal".

Under the influence of the global market turmoil triggered by the US-China tariff dispute, the price of Ethereum (ETH) experienced a "flash crash" in the past 24 hours, falling from nearly $4,300 all the way down to around $3,400, and then partially rebounding to about $3,800, with an overall decline of approximately 13%. This rapid drop triggered nearly $19 billion in crypto asset liquidations, making it one of the largest single-day sell-offs of the year. However, the crowded short positions in the derivatives market and the appearance of "hidden bullish divergence" on technical charts suggest that this sell-off may be excessive, and the price of Ethereum is brewing a potential strong rebound.

Derivation Market: Excessive Concentration of Short Positions Lays the Foundation for a Short Squeeze

· Market crashes often originate from derivation rather than the spot market, and high leverage can amplify volatility. This time, the crash of Ethereum is also accompanied by drastic changes in derivation trading.

· Funding Rate转为负值： Ethereum's funding rate has rapidly changed from +0.0029% on October 9 to -0.019% on October 11. A negative funding rate means that short positions are paying fees to long positions, indicating that most of the current open interest is betting that the price will further fall, and short positions are in an overly crowded state.

· Potential Reversal of Short Positions Crowd: The seemingly negative rates appear to be a bearish signal, but they also create conditions for a strong rebound. When short positions are overly concentrated, even a slight increase in price may trigger a "short squeeze," forcing a large number of shorts to close their positions and buy back, thus creating a strong upward momentum.

· Active Buy Volume Recovery: Another derivation indicator, the "Taker Buy Ratio" (active buy ratio), has recovered from 0.47 to 0.50 over the past 24 hours. This change indicates that the active buy volume in the market is gradually matching the active sell volume, which is an early sign that the dumping pressure is nearing exhaustion. Notably, the last time this ratio reached similar levels (September 28), Ethereum experienced a 13% rebound, rising from $4,140 to $4,680.

· Overall, the overselling and short positions in the derivation market not only do not indicate a deeper fall, but may instead be building up for a technical Rebound.

Technical Analysis: Hidden Bullish Divergence Emerges, Key Support Recovery Path

(Source: TradingView)

Daily Chart "Hidden Bullish Divergence": The daily price chart of Ethereum provides further bullish signals. The chart has formed a "Hidden Bullish Divergence" pattern, where the price makes higher lows while the Relative Strength Index (RSI) makes lower lows. RSI is an indicator that measures momentum.

Signal of momentum reversal: This divergence pattern suggests that although the price has not fully recovered, the selling momentum is weakening. The last time this same pattern appeared (from August 2 to September 25), Ethereum rose by nearly 25% within a few days.

Key Price Level Analysis:

· Key support level: $3,430. As long as the price of Ethereum can stay above this level, the current rebound setup remains valid.

· Short-term confirmation resistance levels: $3,810 and $4,040. A price breakout above $3,810 and $4,040 will confirm a short-term rebound.

· Potential target: Once the recovery is confirmed, Ethereum's potential rise target may be close to $4,280, about 13% higher than the current level.

· Structural failure point: If the price falls below $3,350, it will invalidate the current bullish structure, and bearish momentum will regain dominance.

Summarizing the current market, the sharp sell-off of Ethereum may actually create a potential rebound zone on its technical charts. Under the dual effect of overcrowded short positions and the quiet return of technical momentum, if buyers can maintain key support, the likelihood of the price rebounding to $4,280 is increasing. A closing price that stabilizes at $3,810 would be a strong signal of the return of momentum.

Conclusion

Ethereum has plummeted due to the impact of geopolitical risks, and the market's panic seems to have reached a phase extreme. The extreme short positions in the derivatives market, coupled with the subtle "hidden bullish divergence" on the daily chart, collectively depict a potential pattern of "things will reverse after reaching extremes." For investors focused on Ethereum, the current focal points are whether it can hold the key support at $3,430 and whether it can quickly recover the resistance level at $3,810. If achieved, the market may welcome a technical correction rebound.

Disclaimer: This article is for informational purposes only and does not constitute any investment advice. The cryptocurrency market is highly volatile, and investors should make decisions cautiously.