Ethereum (ETH) briefly declined to $3,700 yesterday, sparking panic among traders. The leading altcoin has since recovered, though modestly, before stalling just below $3,900. The wider sentiment remains cautious, but this crowd fear may once again fuel recovery.
Price Bounce Signals
Over the past month, Ethereum’s price has shown notable volatility, starting near $4,170 in early October before briefly slipping below $3,800 by month’s end. Despite multiple short-lived rebounds, the overall trend remained downward after selling pressure increased mid-month. Following the most recent dip this week, many traders have opened short positions against ETH.
Taking previous instances into account, this kind of bearish sentiment often leads to a rebound, according to crypto analytic firm Santiment.
Crypto analyst Galaxy observed that Ethereum is nearing the end of a massive 1,400-day consolidation pattern, often referred to as a “triangle.” His data indicated that ETH has been compressing between long-term support and resistance levels since 2021. As such, November could mark the completion of this retest and potentially point to the start of a renewed bull run if the crypto asset successfully breaks out of this formation.
Meanwhile, analyst Michaël van de Poppe said that Ethereum is in a good buying zone as it tests its 20-week moving average and a key support level. He believes this correction phase won’t last long and could soon lead to a rebound in the asset’s price.
Ethereum’s on-chain data also offers a similar cautiously optimistic view. According to crypto analytics firm Alphractal, while the Buy/Sell Pressure Delta has turned negative and on-chain activity has slowed, these signals do not necessarily point to weakness. Similar patterns in the past have often appeared near the end of correction phases.
Alphractal explained that the current readings are far milder than those seen earlier this year, which could mean that the market may be in a quiet accumulation phase rather than a decline. Such a setup could position Ethereum for the next leg of its growth once sentiment begins to improve.
Potential for Further Decline
Ethereum’s path to recovery could still be bumpy. CryptoQuant’s liquidation data, for one, suggests that correction could still deepen, as the market remains dominated by leveraged long positions. Recent spikes in long liquidations, often triggered by sharp price drops, show traders being forced out of overextended positions. Unlike short squeezes that typically spark quick rebounds, these long-driven liquidations have left prices weak with no strong recovery in sight.
If this trend continues alongside falling open interest, Ethereum risks testing levels below $3,400.