Ethereum Price Analysis: Will ETH Remain Below $2,350 as Large Traders Increase Short Positions?

Publication date: October 27, 2026
Category: Ethereum News | ETH Price Analysis | Derivatives Market
Author: Coinccino Editorial Team

Introduction

Ethereum (ETH) is under renewed selling pressure after breaking below an ascending trendline near $2,350, a technical level that had supported its recovery over recent months. AMBCrypto reported on October 27 that weakening derivatives funding rates and bearish positioning among large traders were adding to concerns about Ethereum's near-term direction.

According to the report, ETH funding rates declined by 56% over 24 hours to a reported reading of 0.004. At the same time, CryptoQuant data cited by AMBCrypto indicated that Ethereum exchange reserves had fallen to a weekly low.

These indicators present a mixed picture. Lower funding rates may reflect reduced demand for leveraged long positions, while declining exchange reserves can indicate that fewer tokens are immediately available on centralized exchanges. Neither development, however, independently determines the next price movement.

The immediate question for market participants is whether Ethereum can reclaim the $2,350 area or whether continued selling pressure will push the asset toward lower support levels.

Key Highlights

• Technical breakdown: ETH lost an ascending trendline near $2,350, according to AMBCrypto.

• Funding rates decline: The report cited a 56% drop in Ethereum funding rates over 24 hours, to 0.004.

• Bearish positioning: AMBCrypto reported that large traders were taking additional short positions.

• Exchange reserves fall: CryptoQuant data cited by the publication indicated a weekly low in ETH exchange reserves.

• Conflicting signals: Lower exchange balances may reduce immediately available spot supply, but they do not prevent further price declines.

• No confirmed outcome: ETH's ability to reclaim $2,350 or establish lower support will depend on subsequent price action, market demand and derivatives activity.

1. Ethereum Breaks Below the $2,350 Trendline

The $2,350 area has become an important technical reference following Ethereum's recent decline.

AMBCrypto reported that ETH broke below an ascending trendline that had supported its price structure over the preceding months. A break below an established trendline can indicate that buying momentum has weakened, particularly when accompanied by increased selling activity.

However, technical breakdowns require confirmation. A brief move below support can reverse, while a sustained decline accompanied by strong trading volume may indicate more persistent selling pressure.

For Ethereum, the next developments to monitor include:

Reclaiming $2,350: A sustained move back above the former trendline could suggest that buyers are regaining control. Traders would still need to evaluate trading volume and whether the level holds as support.

Remaining below resistance: If ETH continues to trade below $2,350, the former support area could act as resistance during recovery attempts.

Testing lower support: Continued weakness could lead traders to monitor the recent October low near $2,276, reported in separate market coverage. This level is a reference from recent trading activity, not a guaranteed floor.

The technical picture remains conditional. A breakdown is evidence of weakening price structure, but it does not guarantee an extended decline.

2. Funding Rates Fall as Derivatives Sentiment Weakens

One of the central findings in the AMBCrypto report is the decline in Ethereum funding rates.

Citing CryptoQuant, the publication reported that funding rates fell by 56% over 24 hours to 0.004. The article also noted that the metric had been declining since the beginning of October.

Funding rates are periodic payments between traders holding positions in perpetual futures contracts. Depending on the contract and exchange, positive funding generally means long-position holders pay short-position holders, while negative funding means shorts pay longs.

A decline in funding rates can have several interpretations.

First, traders may be reducing their willingness to pay a premium to maintain leveraged long positions. Second, demand for long exposure may be weakening relative to short exposure. Third, the market may be moving toward a more balanced derivatives structure.

However, a falling funding rate does not automatically mean that the market has become net bearish. The interpretation depends on whether the rate remains positive, turns negative or changes alongside open interest and actual price movements.

AMBCrypto's reported value should also be interpreted using the underlying provider's contract, sampling interval and units. It should not be assumed to represent the same rate across all exchanges.

For a stronger assessment, market observers would need to compare funding rates with open interest, liquidation data and spot-market trading volume.

3. Large Traders' Short Positions Add to Downside Concerns

AMBCrypto reported that large traders were opening more short positions despite declining ETH exchange reserves.

A short position is designed to benefit if an asset's price falls. When large traders increase short exposure during a technical breakdown, it can reinforce concerns about near-term market sentiment.

However, the term "whales" requires careful interpretation. Large on-chain transfers do not necessarily represent open trading positions, and a derivatives account's exposure does not always reveal the holder's overall portfolio.

The available report does not establish that every large Ethereum holder is bearish, nor does it demonstrate that all reported short positions were newly opened directional bets rather than hedges.

Several developments could follow from increased short positioning:

• Continued downside: If ETH weakens further, profitable short positions could reinforce selling pressure as traders adjust their exposure.

• Short covering: If ETH rebounds unexpectedly, traders may close short positions by buying back contracts, potentially amplifying a recovery.

• Reduced leverage: Traders may close positions on either side, lowering open interest without producing a lasting directional move.

These are possible market mechanisms, not predictions of a particular outcome. Short-position data is most informative when evaluated alongside price changes, open interest and liquidation activity.

4. Falling Exchange Reserves Provide a Counterpoint

While derivatives sentiment weakened, the AMBCrypto report highlighted declining Ethereum exchange reserves.

Exchange reserves measure the amount of ETH held in wallets attributed to centralized trading platforms. A decline can occur when holders withdraw tokens to self-custody wallets, move assets into staking or transfer them to other destinations.

If fewer ETH are held on exchanges, the immediately available supply for centralized spot-market selling may be lower. This can support prices under certain conditions, particularly when demand remains strong.

But the relationship is not automatic.

Tokens withdrawn from exchanges can still be sold through other platforms or deposited again later. Reserve estimates may also change because of wallet attribution, exchange transfers and differences in data-provider methodologies.

Data verification note: AMBCrypto's accessible report describes the weekly reserve low using a figure of "$3.2 million." The unit is unclear in that presentation, so this article does not treat it as a verified ETH quantity or dollar-denominated reserve total. The broader reserve trend should be checked against the original CryptoQuant chart before publishing an exact figure.

The central takeaway is that declining reserves may constrain immediately available exchange supply, but they cannot independently confirm that Ethereum has reached a price bottom.

5. Ethereum's Broader Market Conditions

Ethereum's short-term direction also depends on factors beyond its own derivatives market.

Bitcoin and overall cryptocurrency sentiment

Ethereum often responds to broader cryptocurrency market movements. A sustained decline in Bitcoin or a reduction in risk appetite across digital assets can place additional pressure on ETH, even if Ethereum-specific supply indicators appear supportive.

Spot demand

A recovery is more convincing when supported by actual spot-market buying rather than derivatives activity alone. Spot volume, exchange flows and net buying pressure can help distinguish sustained demand from short-lived positioning changes.

Leverage and liquidations

Leverage can magnify both gains and losses. If ETH falls sharply, leveraged long positions may be liquidated, adding forced selling to the market. Conversely, a rapid rebound can force short sellers to close positions, contributing to upward volatility.

A market snapshot published by Liqwall for October 26 showed ETH near $2,311, with approximately $43.8 million in ETH derivatives liquidations over the preceding 24 hours. About $33.2 million of those liquidations involved long positions, while approximately $10.7 million involved shorts.

These figures are time-specific estimates from a third-party tracking platform, not a live reading for October 27. They nevertheless illustrate how leveraged positioning can amplify volatility during a market decline.

Source: Liqwall, ETH liquidation and derivatives dashboard.

6. ETH Price Scenarios: What Happens Next?

Ethereum's near-term direction depends on whether buyers can restore the broken technical structure or whether selling pressure persists.

These scenarios are conditional analytical frameworks, not guaranteed forecasts.

The $2,276 level is drawn from separate recent market reporting and should be reassessed against current price data before publication. A break below it would not, by itself, determine how far ETH could fall.

Likewise, a recovery above $2,350 would need confirmation through sustained trading and demand rather than a brief intraday move.

7. Risks and Uncertainties

Several limitations are important when interpreting the current indicators.

Funding-rate methodology: Values can differ across exchanges and contracts. The reported 0.004 reading should not be interpreted without confirming its units and calculation period.

Whale-position uncertainty: Large-trader activity may represent hedging, portfolio rebalancing or directional speculation. Public data does not always establish the trader's complete exposure.

Exchange-reserve limitations: Falling balances do not guarantee reduced selling or an immediate supply shortage.

Technical-analysis uncertainty: Trendlines and support levels are analytical references, not fixed boundaries that must hold.

Broader market conditions: Bitcoin's price, macroeconomic developments, institutional flows and changes in risk appetite can override Ethereum-specific signals.

These uncertainties make it important to distinguish observed market data from the interpretations placed on it.

Final Takeaway

Ethereum's loss of the $2,350 trendline, declining funding rates and reported increase in large-trader short positions point to weakening short-term market conditions. At the same time, falling exchange reserves offer a counterpoint by suggesting that less ETH may be immediately available on centralized exchanges.

The balance between these forces remains unresolved. If Ethereum reclaims $2,350 with sustained buying demand, the recent breakdown could prove temporary. If selling pressure persists, traders may focus on lower levels, including the recent October low near $2,276.

Neither the funding-rate decline nor the reported whale positioning guarantees further losses. For a clearer picture, market observers should monitor spot demand, funding rates, open interest, liquidations and verified exchange-reserve data together.

Coinccino will continue covering Ethereum price developments and derivatives-market indicators with a focus on factual reporting, balanced analysis and investor education.

Informational Disclaimer

This article is for informational and educational purposes only. It does not constitute financial, investment, legal or trading advice and does not provide buy or sell signals. Cryptocurrency assets are volatile and can lose substantial value. Technical indicators and derivatives metrics are uncertain and may change rapidly. Readers should independently verify data and conduct their own research before making financial decisions.