Ethereum continues to trade below the $2,000 level, reflecting continued selling pressure and increasingly volatile market sentiment. The inability to regain this psychological threshold keeps traders on the defensive, with increased volatility and weakened confidence as negative sentiment spreads across the broader cryptocurrency market. While corrections are not uncommon after forceful cycles, the current environment is showing clear signs of stress, and investors are closely watching liquidity conditions and derivatives positioning for clues about the next direction of movement.

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

According to the data, Binance itself has seen a decline of approximately 40 million ETH in open interest over the past month, while Gate.io has seen a decline of more than 20 million ETH. OKX saw a reduction of almost 6.8 million ETH, with Bybit contributing around 8.5 million ETH, bringing the total reduction on these platforms to around 75 million ETH.

Widespread deleveraging suggests a reset of the Ethereum market

CryptoQuant report further notes that when taking into account additional platforms showing negative open interest readings – even those with relatively smaller volumes – the total decline across all exchanges exceeds 80 million ETH over the last 30 days. This confirms that the deleveraging trend is not narrow to a few major markets, but represents a broader structural change across the Ethereum derivatives ecosystem.

Such a widespread decline in open interest typically indicates that investors, especially those relying on leverage, are reducing their exposure rather than initiating up-to-date speculative positions. This behavior may reflect caution due to increased volatility or pressure from recent price declines that have resulted in margin adjustments. Historically, similar environments have tended to emerge during market transitions when speculative momentum has waned and risk management has become a priority.

From a structural point of view, this type of contraction may have a “market clearing” function. By gradually removing weaker leveraged positions, the likelihood of a sudden liquidation cascade may decrease over time. While this does not guarantee an immediate economic recovery, flushing out excess leverage often stabilizes market conditions. For Ethereum, the ongoing derivatives positioning reset could assist establish a more solid 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 continued downward pressure following the loss of the $2,000 level, a zone that previously acted as both psychological support and technical reversal in previous consolidation phases. The recent breakdown places ETH below several major moving averages, which are currently acting more as overall resistance than support, indicating a weakening of upside momentum and a shift towards a more defensive market structure.

The price action reflects a clear rejection from the $3,000-$3,500 area early in the cycle, followed by a sequence of lower highs. This pattern usually signals a corrective or transient phase, rather than a continuation of a previous uptrend. The recent decline was also accompanied by increased trading volume, suggesting distribution and deleveraging rather than organic accumulation.

From a structural perspective, the next significant area of ​​support appears near the $1,600-$1,700 range, where consolidation and demand have previously emerged. Maintaining this zone would assist maintain a broader long-term framework despite current weakness. However, a sustained break below this value may boost the likelihood of a deeper retracement phase.

Ethereum remains highly sensitive to macro liquidity conditions, derivative positioning and overall cryptocurrency market sentiment, and recovery depends on renewed demand and stabilization above key technical levels.

Featured image from ChatGPT, chart from TradingView.com