Ethereum Open Interest Sees Largest Cleanup Since Early 2024
Ethereum Open Interest has experienced its largest reset since early 2024. The crypto fell below $4,000 after a 20% loss since mid-September. Analysts highlight a sharp contraction of positions on major derivatives platforms. On Binance, over $4 billion in open interest was wiped out in two days. Bybit saw a $1.2 billion drop, while OKX recorded $580 million in cuts. This shift in Ethereum Open Interest reduces liquidation risk and can stabilize the market. The correction tests ETH support near the 50-day moving average. A close below this line could trigger a deeper retracement toward the 200-day MA around $3,100. Longer term, holding above $3,500 supports fundamentals. Traders should monitor open interest levels and key support zones for clues. This leverage reset may pave the way for a healthier recovery once speculative pressure eases.
Neutral
Despite the negative price action—ETH falling below $4,000 and a 20% drop—this open interest cleanup eases over-leveraged positions. Lower Ethereum Open Interest can reduce liquidation cascades and foster market stability. Historically, similar resets on Bitcoin in May 2023 led to a consolidation period before a renewed rally. In the short term, traders may face increased volatility as positions rebalance. However, reduced leverage supports a healthier market structure and limits systemic risk. Over the longer term, stable open interest levels and cleared speculative excess could provide a foundation for sustained bullish momentum once demand returns. Therefore, this event is classified as neutral, reflecting short-term downside pressure balanced by potential medium- to long-term benefits of a cleaned-up derivatives market.