Ethereum Open Interest Lowest Since March…Enough Strength to Break $2,787?

▲ Ethereum (ETH) ©Dasol Ko

As Ethereum (ETH) hovers around $2,680, open interest in the derivatives market has fallen to its lowest level since March. While reduced leverage can lower the risk of a sharp decline due to large-scale liquidations, it does not necessarily create new buying demand. Therefore, whether ETH can break through the $2,626 support and the $2,787 resistance has emerged as a key variable determining its next direction.

According to investment media FXStreet on October 1 (local time), Ethereum's open interest decreased to 12.49 million ETH, marking its lowest level since March 1. Despite ETH's price recovery starting in early July, open interest declined by 1.46 million ETH during the same period, indicating that leveraged funds did not expand in line with the price increase. The Taker Buy Sell Ratio, which reflects immediate buying and selling sentiment in the perpetual futures market, has also mostly remained in negative territory since last week, suggesting a slight selling bias among derivatives traders.

Decreased leverage is sending mixed signals to the market. Analysts at Bitfinex explained that a reduction in open interest and a narrowing of futures premiums have historically supported price trends. This is because lower leverage reduces the likelihood of price declines being amplified by cascading liquidations. Conversely, if open interest does not increase even with rising prices, it can be interpreted as weak speculative demand and ongoing profit-taking. Analysts emphasized that low leverage does not create buyers and that new demand in the spot market is needed for further upside.

Spot ETF supply and demand also faltered. According to SoSoValue, the US Ethereum Spot ETF recorded a slight net outflow of $2.8 million on Tuesday, ending a 7-day streak of net inflows. Subsequently, the US August Personal Consumption Expenditures (PCE) price index was announced at 3.4%, lower than the estimated 3.7%, and core PCE was 3.0%, also lower than the projected 3.3%. However, ETH moved within the $2,620-$2,780 range without establishing a clear direction.

In the derivatives market, ETH positions totaling $56.8 million were liquidated in the last 24 hours, with long position liquidations accounting for a larger share at $32 million. Technically, ETH is trading above key Exponential Moving Averages (EMA), maintaining a bullish structure. The 14-day Relative Strength Index (RSI) is around 62, and the Stochastic Oscillator is around 67, indicating that upward momentum is maintained but has not yet reached overbought levels.

The short-term support level is $2,626, which, coupled with the 20-day EMA at $2,619, forms a key demand zone. If this zone breaks, $2,545 and $2,432 are presented as the next support levels, and in case of further decline, the 50-day EMA at $2,447 and the 200-day EMA at $2,313 zones are also noteworthy. Conversely, the key resistance on the upside is $2,787. A breakthrough here could open up possibilities for a rise to $2,880, followed by $3,088. The crucial factor for the next breakthrough will be whether spot buying demand actually flows into a market with reduced leverage.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*