Escalating tensions in the Middle East caused a sharp decline in the cryptocurrency market on Tuesday. The volatility led to the liquidation of more than $500 million in trading positions. The leading altcoin, Ethereum (ETH), was severely affected, with long traders suffering significant losses.
Technical indicators suggest this downturn has encouraged bears to take control of the market — and it appears they are succeeding. Will October get off to a rough start?
Ethereum Long-Term Traders Count Losses
On Monday, the price of Ethereum dropped to $2,447, the lowest level recorded in the past ten days. This unexpected drop led to the liquidation of many long positions that were opened earlier in the expectation that the price would continue to rise.
When the value of an asset moves against a trader’s position, the exchange is forced to close the position due to lack of Capital to maintain it, resulting in liquidation. Long liquidation occurs when traders are forced to sell assets at a lower price to cover their losses when the price falls.
This typically occurs when the asset’s price falls below a certain level, forcing traders who predicted the price would rise out of the market. According to data from Coinglass, ETH traders with long positions experienced $96 million worth of liquidations on Monday, marking the highest single-day liquidation in the past 57 days.
Total Ethereum Liquidation. Source: Coinglass
Despite recent losses, ETH futures traders continue to open more long positions. The coin’s funding rate — the recurring fee paid to keep its contract price in line with the spot price — remains positive, signaling stronger demand for long positions than for shorts.
Currently, the funding rate is 0.0052%, reflecting the ongoing optimism among ETH futures traders.
Ethereum Funding Rate. Source: Coinglass
ETH Price Prediction: Spot Market Traders Are Worried
Ethereum’s technical setup suggests spot traders have taken a different approach, as indicators from the coin’s daily chart show bears have regained control of the market.
For example, ETH 's Elder-Ray Index, which measures the relationship between buyer and seller strength, turned negative for the first time since September 11. When the index is negative, bear strength dominates the market.
Furthermore, according to ETH 's MACD (moving Medium convergence/divergence) indicator, the MACD line (blue) has crossed below the signal line (orange) and is likely to decline further. This setup shows a bearish outlook, signaling that momentum is shifting downwards and prices could fall further.
Ethereum Price Analysis. Source: TradingView
If selling pressure increases, Ethereum price could retest the August 5 low of $2,112, which would represent a 15% drop from current levels.
However, if the overall market trend improves, the bulls could regain control and push Ethereum price towards the resistance at $3,101.
