Why is Ethereum (ETH) price down today?

Ether (ETH) price has declined 3.94% over the past 24 hours, its steepest correction since Nov. 14. After retesting its psychological level at $4,000 on Dec. 6, the altcoin is forming another higher low in the charts.

Ethereum long liquidations drag price below $3,800

Data from CoinGlass highlighted that Ether’s bearish drawdown was coupled with significant liquidations. Over the past 18 hours, over $44 million in leveraged positions have been liquidated, with $42 million in long positions swept out.

In light of the liquidations, one of the major reasons for the current drawdown is a marketwide funding rate reset for altcoins. Last week, Bitcoin’s flash crash to $90,800 reset its funding rate by 80%, but most altcoins continued to display high funding rates.

Felix Hartman, managing partner at Hartmann Capital, said earlier last week,

“Most alts now have funding rates north of 100% annualized. Last moves purely perp driven, spot volumes declining.”

Jacob Canfield, an independent trader, retained an optimistic outlook about the current situation and highlighted that the funding rate for ETH is coming down to “near neutral.”

Similarly, Reetika, an anonymous trader, indicated that the current altcoin dump is a delayed reaction to BTC’s leverage flush last week when the altcoin managed to avoid a correction.

“Now Alts is getting slammed while $BTC chops,” the trader said, adding that the funding rate is getting healthier across the board.

Related: Ethereum ‘impulse breakout’ will lead to $15K ETH price in 2025 — Analyst

Will ETH price rebound quickly?

From a technical perspective, Ether’s price action between $3,700 and $3,800 will gauge most of the market’s interest. On the 4-hour chart, ETH repeatedly established a higher low when the price retested the range between the 50-day and 100-day EMA levels, combined with the relative strength index (RSI) reversing from the 50 level.

The price demonstrates a similar setup right now, but ETH may drop as low as $3,700. This is due to the price imbalance created by the flash drop down to $3,615 on Dec. 6.

The flash decline created a wick on both the 1-hour and 4-hour time frames, and these types of liquidity imbalances in order books are most likely to be filled by at least 50%. The 50% mark on the wick is around $3,735, where traders may potentially look to open long positions.

However, a daily close above $3,950 will invalidate the above possibility, and ETH price would target its next higher high above $4,100 in the charts.

Related: Ethereum’s chart signals to traders that a new high could hit next week

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.