Ethereum Derivatives Reset raises questions about the next price Move: What happens next?

[Ben Graham]

Ethereum continues to struggle below the $2,000 level, reflecting persistent selling pressure and increasingly fragile market sentiment. The inability to reclaim this psychological threshold has kept traders defensive, with volatility elevated and confidence weakened as negative sentiment spreads across the broader crypto market. While corrections are not unusual after strong cycles, the current environment shows clear signs of stress, with investors closely watching liquidity conditions and derivatives positioning for clues about the next directional move.

A recent CryptoQuant report provides additional context by highlighting a significant contraction in Ethereum futures open interest. Data tracking the 30-day change in net open interest across major trading platforms indicates that the derivatives market is undergoing a clear phase of deleveraging and risk readjustment. The decline appears concentrated on key exchanges such as Binance, Gate.io, OKX, and Bybit, pointing to a widespread outflow of capital from leveraged positions.

According to the figures, Binance alone recorded an approximate drop of 40 million ETH in open interest over the past month, while Gate.io saw a decline exceeding 20 million ETH. OKX posted a reduction of nearly 6.8 million ETH, with Bybit contributing roughly 8.5 million ETH, bringing the combined contraction across these platforms to around 75 million ETH.

Broad Deleveraging Suggests Ethereum Market Reset

The CryptoQuant report further notes that when additional platforms showing negative open interest readings are included — even those with comparatively smaller volumes — the total contraction across all exchanges exceeds 80 million ETH over the past 30 days. This confirms that the deleveraging trend is not isolated to a handful of major venues but represents a broader structural shift across the Ethereum derivatives ecosystem.

Such a widespread decline in open interest typically indicates that traders, particularly those relying on leverage, are reducing exposure rather than initiating new speculative positions. This behavior may reflect caution following heightened volatility or pressure from recent price declines that triggered margin adjustments. Historically, similar environments tend to emerge during transitional market phases, when speculative momentum cools, and risk management becomes a priority.

From a structural standpoint, this type of contraction can function as a market “clean-up.” By gradually removing weaker leveraged positions, the likelihood of sudden liquidation cascades may diminish over time. While this does not guarantee an immediate recovery, flushing out excess leverage often stabilizes market conditions. In Ethereum’s case, the ongoing reset in derivatives positioning could help establish a firmer price base if broader liquidity conditions and investor sentiment begin to stabilize.

Ethereum Faces Structural Pressure Below Key Weekly Support

Ethereum’s weekly chart shows persistent downside pressure after losing the $2,000 level, a zone that previously acted as both psychological support and a technical pivot during prior consolidation phases. The recent breakdown places ETH below several major moving averages, which now function as overhead resistance rather than support, indicating weakening bullish momentum and a shift toward a more defensive market structure.

Price action reflects a clear rejection from the $3,000–$3,500 region earlier in the cycle, followed by a sequence of lower highs. This pattern typically signals a corrective or transitional phase rather than a continuation of the prior bullish trend. The latest decline has also been accompanied by elevated trading volume, suggesting distribution and deleveraging rather than organic accumulation.

From a structural standpoint, the next meaningful support area appears near the $1,600–$1,700 range, where prior consolidation and demand previously emerged. Holding this zone would help maintain the broader long-term framework despite current weakness. A sustained break below it, however, could increase the probability of a deeper retracement phase.

Ethereum remains highly sensitive to macro liquidity conditions, derivatives positioning, and overall crypto market sentiment, with recovery dependent on renewed demand and stabilization above key technical levels.

Featured image from ChatGPT, chart from TradingView.com