Ethereum is showing tentative signs of relief after weeks of downward pressure, but the recovery remains fragile. The price is currently struggling to decisively move above the $3,400 level, an area that has acted as resistance several times during recent rebound attempts. Although near-term sentiment has improved alongside broader market stabilization, risks remain elevated. Several analysts warn that Ethereum could still face further declines in the coming weeks if momentum fades and macroeconomic or liquidity conditions deteriorate again.
To add to the complexity of the picture, derivatives data suggests further accumulation of risk. A report from Arab Chain highlights that Ethereum’s open interest on Binance has climbed to around $8.6 billion, its highest level since October 9.
This is a notable change after a prolonged period of contraction that followed October’s sharp selloff, when open interest fell from more than $10 billion to less than $7 billion in a matter of days. This episode removed excessive debt from the market and forced traders to adopt a defensive position.
The current rise in open interest indicates that traders are gradually returning and rebuilding their positions at lower price levels. However, it also increases the price sensitivity to sudden movements.
Ethereum Derivatives Activity Restores Confidence
Ethereum is currently testing a key structural resistance zone around $3,400, and the latest derivatives data adds important context to this price behavior. According to Arab Chain’s CryptoQuant report, the rise in open interest on Binance reflects renewed activity in the derivatives market and a sharp return in traders’ appetite for leverage. This is a notable change from the defensive posture seen after October’s wave of liquidations.
What stands out is that this increase in open interest is occurring as ETH trades near the $3,300-$3,400 area, well below its previous cycle highs. This suggests that traders are not chasing prices at the extremes, but rather building positions at relatively discounted levels. Historically, this type of positioning often reflects medium-term upside expectations rather than short-term speculation.
At the same time, the fact that open interest rates have reached their highest level since October 9 without returning to previous overheating extremes points to a more balanced recovery. If this growth is driven by regular capital inflows rather than aggressive leverage, it supports the idea of a healthier market structure forming after the post-liquidation contraction phase.
However, risks remain asymmetric near resistance. Continued and rapid expansion of open positions while prices stagnate below $3,400 could increase vulnerability to high volatility. For Ethereum to maintain momentum, price and open interest must remain aligned, confirming that confidence is reestablishing rather than overextending.
Price faces key resistance level
Ethereum price action on the daily chart shows a market attempting to recover, but still limited by strong structural resistance near the $3,400 region. After a sharp decline from October highs, ETH established a local bottom below $2,900 and has since formed higher lows, suggesting near-term stabilization rather than a confirmed trend reversal.
The price is currently trading near $3,300, where several technical factors converge. The descending 200-day moving average and prior horizontal support-turned-resistance cap the bullish momentum. Each rally in this area has been met with selling pressure, highlighting that this area remains a critical supply region. Failure to decisively reclaim $3,400 keeps the broader structure neutral to bearish.
On the other hand, the rising near-term moving average and recent lows around $3,000-$3,050 provide initial support. As long as ETH holds above this range, the market maintains a constructive consolidation pattern rather than resuming the previous impulsive downtrend. Volume remained subdued during the rally, indicating controlled participation rather than aggressive speculative buying.
ETH is compressing between rising near-term support and falling long-term resistance. This type of price behavior often precedes a directional move. A sharp daily close above $3,400 would signal a shift in market control and open the door to a broader recovery.
Featured image from ChatGPT, chart from TradingView.com
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