Ethereum rallied back above $2,000 after a weaker-than-expected US CPI reading, and the move has traders and analysts wondering if worse lies behind the coin or if this is a temporary relief rally.
Reports indicate that futures open interest has fallen sharply over the past 30 days, funding rates have fallen into deep negative territory, and some on-chain metrics indicate a clustered support zone below current prices.
Decline in Open Interest Raises Questions
According to CryptoQuant, the headline figure showing an 80 million ETH drop in open interest across major sites has attracted attention. This figure, taken literally, would be enormous. This suggests that large positions were closed rather than new ones being created.
But the scale of change also calls for careful consideration; Reporting errors or comparisons of dollar values mislabeled as ETH may occur. Nonetheless, a significant pullback in futures exposure on exchanges such as Binance, Gate, Bybit, and OKX has been recorded, and it appears real.
Funding rate and crowd
Funding rates on some platforms are reaching levels not seen in about three years. When traders pay to hold short positions, it signals strong bearish conviction.
It has been reported that such extremes tend to be followed by a sharp reversal, as the crowd can become one-sided, leading to a rapid reversal as market sentiment changes.
This happened in late 2022, where there was extreme short selling followed by a rapid reversal. This doesn’t mean it will happen this time around, as markets could remain one-sided for longer than expected.
Support areas and technical targets
On-chain data from Glassnode reveals a significant base cost zone between $1,880 and $1,900, where approximately 1.3 million ETH was traded.
The $2,000 mark acts as a psychological anchor and is reinforced by clusters of moving averages. A breakout from the recent falling wedge trend indicates an initial target measured near $2,150, a ceiling that would be tested ahead of higher resistance near $2,260 and then $2,500.
These levels are not certainties; the broader market tone and direction of Bitcoin will influence their realization.
Reducing open interest rates for now reduces the risk of cascading liquidations, which can keep intraday volatility in check. At the same time, low funding rates show that bearish bets are still active and could be reduced if the momentum reverses.
Reports indicate that accumulation portfolios increased inflows when prices fell, suggesting longer-term conviction from some investors.
Featured image from Unsplash, chart from TradingView
