Ethereum retreats below $2,700... Why are leverage and network activity quiet?

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Ethereum (ETH) has retreated below $2,700, taking a breather from its recent surge, but open interest and network activity are not keeping pace with the price increase. In the short term, after being blocked by the $2,786 resistance, it is heading towards the $2,626 support line, but analysis suggests that a mid-term upward structure is maintained as it trades above major Exponential Moving Averages (EMAs).

According to investment media FXStreet on September 23 (local time), Ethereum fell 3% that day, dropping below $2,700, and was trading at $2,670 at the time of writing. Notably, open interest has decreased by approximately 700,000 ETH to 12.9 million ETH after surpassing $2 million during the short squeeze (buying pressure generated to liquidate or cover short positions) at the end of August. After a slight recovery in early September, it decreased again and is currently hovering around 13 million ETH.

Even in dollar terms, the movement of leveraged funds was slower than the price increase. While Ethereum's price rose by 70% since forming a low at the end of June, open interest increased by 60% to $34.8 billion during the same period. FXStreet analyzed that the relatively limited participation of leveraged funds in the recent uptrend indicates a cautious attitude among investors. However, it added that there is still room for further increases in open interest if leveraged investors expand their exposure in the future.

Network activity also did not show a clear correlation with the price increase. Active Addresses, which represent the number of unique on-chain addresses participating in transactions over a certain period, have stagnated over the past three months, and the total number of mainnet transactions has also decreased during the same period. Historically, network activity tends to expand during periods of sustained price increases, but the media explained that the increased Layer 2 processing capacity after recent Ethereum upgrades could also be a reason for relatively weak mainnet activity.

In the derivatives market, approximately $119 million worth of Ethereum positions were liquidated in the last 24 hours, with long position liquidations accounting for $95.8 million. Technically, ETH faced resistance at $2,786 and is now heading towards the $2,626 support line. If this price breaks, $2,549, where the 20-day Exponential Moving Average is located, and the horizontal support line of $2,544 will be the next lines of defense. In case of further decline, $2,431 and the 50-day Exponential Moving Average of $2,368 were presented as support zones.

If it rebounds, the first resistance level is $2,786, followed by $2,894 and $3,177 as price levels that need to be overcome to extend the uptrend. The Relative Strength Index (RSI) and Stochastic Oscillator have recently entered the overbought zone and are now cooling down. FXStreet analyzed that while Ethereum maintains levels above its major Exponential Moving Averages, the technical bullish trend is still valid, but in the short term, the support at $2,626 is crucial.

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