There is an old saying in traditional markets which is actually more like a trading rule. It goes, “when the trend is negative, one can only be neutral or short,” meaning bet on the price decrease. The problem is that a relief bounce tricks traders into believing that the negative prevailing sentiment has shifted into a buyers’ market.

For example, after analyzing Ether's (ETH) price chart, one might conclude that after a 41% crash, a bull run should be ignited sooner rather than later. Unfortunately, this is a bit of a fallacy because markets can exist in periods of non-definition (trendwise).

Thus, you could say that the above chart presents a long period of range trading near $2,800, for example. Considering Ether's 88% annualized volatility, moves between $2,400 and $3,200 should be regarded as normal.

Using technical analysis, a trader might point to lower highs forming the above downtrend channel, but should Ether bears celebrate and call for $2,500 and lower? That largely depends on how retail traders are positioned, along with the Ethereum network's on-chain metrics.

A few things to consider are whether the 63% drop in network transaction fees to the current $17 reflects a decrease in the use of decentralized applications (DApps), or are users benefiting from engaging with other layer-2 scaling solutions?

To understand how confident traders are about Ether's price recovery, one should analyze the perpetual contracts futures data. This is the retail traders' preferred derivative because exchanges offer up to 50x leverage, and its price tends to track the regular spot markets perfectly.

In any futures contract trade, longs (buyers) and shorts (sellers) are matched at all times, but their leverage use can vary.