Ethereum fell below $ 4,000 for the first time since early August, marking a significant change in the feeling of the market. After weeks of solid performance, ETH has now lost almost 20% of its value since September 13, leaving many merchants concerned about the next decision. The broader correction of the market has fueled uncertainty, but some analysts argue that it is a necessary reset which could prepare the ground for renewed growth.
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The best analyst Darkfost stresses that Ethereum’s open interest is to live one of his greatest resets. He notes that after an extended period of bullish impulse, an excess lever effect was punished, leading to a strong contraction in the positions. This drop is particularly visible in Binance, where a large part of the recent ETH trading activity took place.
Although the drop in price and feeling seems negative, analysts see potential positive points in this reset. The drop in open interests often reduces the risk of cascade liquidation and allows the market to stabilize. For Ethereum, this moment can serve as a critical test of its ability to have solid support levels and prepare the ground for its next movement once the bullish momentum returns.
The reset of the open interest of Ethereum marks a turning point
Darkfost explains that the recent change in the open interest of Ethereum is not only significant but also one of the strongest resets observed since the beginning of 2024. Historically, such resets follow the periods when the excessive lever effect pushes its open interest to unusual levels, as was the case for ETH in recent weeks. The cryptocurrency had attracted a large part of the attention of the market, fueled by the enthusiasm of the ETFs and the strong models of accumulation, which made it vulnerable to lively liquidations.
Once the liquidations accumulate and the open interest falls, the immediate sale pressure often begins to relax. This tends to create conditions where the market can stabilize and, in some cases, prepare for recovery. The dynamics can be considered as a “cleaning” effect, eliminating overextessing merchants and restoring balance in the structure of the market.
In detail, Binance recorded the most steep monthly decrease, with more than $ 3 billion of open interest destroyed on September 23, followed from yesterday to $ 1 billion. Bybit was also faced with a reduction of $ 1.2 billion, while OKX dropped around $ 580 million. These figures highlight the scale of reset on the main derived platforms.
This contraction reflects a wider reset, relaxing an environment that had become dangerously over -gone. For Ethereum, it can mark the beginning of a healthier phase, where reduced speculative pressure allows organic demand and fundamentals to play a stronger role in the formation of the following trend.
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Price action information: test critical levels
Ethereum (ETH) is negotiated nearly $ 3,939, marking a sharp drop of more than 5% during the last session and extending its correction from the early September summit more than $ 4,700. This drop brought ETH below the psychological level of $ 4,000 for the first time since August, reporting the increase in sales pressure.
The graph shows that ETH breaks down after having formed a superior double model around the beach of $ 4,700 to $ 4,800, a conventional bearish signal which suggested the exhaustion of the ascending momentum. The rejection of this area has now pushed ETH closer to its mobile average at 50 days (blue), which previously acted as strong support during the rally. A decisive closure below this line could open the door to a deeper retirement to the 200 -day mobile average (red), now positioned nearly $ 3,100 to $ 3,200.
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Despite the current weakness, the ETH remains in a broader trend when it has been seen from July nearly $ 2,200. This rebound has established a strong upward structure, and as long as ETH holds above the region from $ 3,500 to $ 3,600, long-term prospects remain constructive. For the moment, the Bulls must recover $ 4,200 to resume the momentum, while non-compliance with current levels can speed up the sales pressure and test deeper supports in future sessions.
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