Ethereum Classic Faces Bearish Sentiment Amid Significant Decline

In recent trading sessions, Ethereum Classic (ETC) witnessed a notable downturn, experiencing a sharp 9% decline over the last 24 hours. This downward movement highlights mounting bearish pressure, primarily driven by increased market positioning favoring short sellers. As liquidity in the perpetual market contracted significantly, traders are now facing an uncertain landscape filled with challenges and opportunities.

Bearish Capital Concentration

The recent price drop for Ethereum Classic is closely linked to a significant contraction in market liquidity, with about 9% of liquidity exiting the ETC perpetual market. This resulted in open interest standing at approximately $90.12 million. Analyzing Funding Rate data reveals that the remaining capital predominantly aligns with bearish positions. The Open Interest-Weighted Funding Rate has dipped to -0.0282, marking one of the steepest negative indicators since October 2025, a time when similar bearish price movements were observed.

The negative funding rate is particularly revealing; it indicates that short traders are currently compensating long traders, underscoring the market’s dominant bearish sentiment. Furthermore, liquidation data supports this trend, as long positions have faced significant liquidations compared to their short counterparts. This imbalance in liquidations underscores the strength of bearish conviction, suggesting that the current price action is heavily tipped in favor of sellers.

Mixed Signals in Market Structure

Despite the bearish sentiment reflected in derivative data, Ethereum Classic’s price structure paints a more complex picture. On the daily chart, the asset trades within a descending channel, characterized by defined diagonal resistance and support trendlines. Although descending channels are typically interpreted as bearish formations, they may also set the stage for bullish breakouts if price successfully closes above the upper resistance boundary.

Currently, the price hovers near the midpoint of this channel. A sustained move above the $9.94 resistance level would bolster the argument for a potential short-term recovery. However, examining the broader monthly timeframe reveals a more cautious outlook. Ethereum Classic continues to trend downward in a consolidation pattern defined by horizontal support and descending resistance.

Broader Trends and Support Levels

Structural analysis indicates that Ethereum Classic has recently broken below a critical support level. As the price approaches a lower structural level, traders are closely watching this area to gauge future price movements. A breakdown beneath the support zone could push Ethereum Classic to new all-time lows on its Binance monthly chart. Conversely, should the lower support hold, the potential for a rebound remains viable, keeping traders attentive to market fluctuations.

The importance of maintaining levels above the critical support cannot be overstated. A significant break below this zone could signal further bearish trends, prompting traders to exercise caution in their investment decisions. The evolving market structure necessitates vigilance, as any unexpected moves could drastically alter investor sentiment and market dynamics.

Short-term Momentum Indicators

While the long-term outlook for Ethereum Classic remains cautious, short-term momentum indicators suggest the possibility of a temporary relief bounce. The Moving Average Convergence Divergence (MACD) shows the blue MACD line trending upward toward the orange signal line, signifying potential bullish momentum-buildup. The histogram has begun to generate green bars with increasing intensity, hinting at strengthening bullish resolve in the short term.

Additionally, the Aroon Indicator reinforces this constructive perspective. The Aroon Up (orange) is currently positioned above the Aroon Down (blue), indicating improving upside pressure. If this momentum continues to build, Ethereum Classic could see a short-term rebound in the coming sessions. However, traders should remain cautious; unless the price can reclaim and sustain levels above $9.94, the broader bearish structure remains firmly in place.

Conclusion: Navigating the Current Landscape

In summary, the prevailing derivatives positioning heavily favors bearish traders, and long-term structural indicators suggest a continued bearish trend for Ethereum Classic. While technical indicators hint at the potential for a near-term bounce, investors should remain vigilant as downside risks are still very much a reality. With the market landscape evolving, and prices nearing critical support levels, traders may want to approach Ethereum Classic with caution as they navigate the complexities of the current trading environment.

As Ethereum Classic grapples with significant uncertainty, monitoring price movements and liquidity shifts will be essential in determining potential opportunities or risks. The market remains dynamic, emphasizing the need for ongoing analysis and a proactive approach to investment strategies.