Ethereum Open Interest Halved to $6.4 Billion: Accelerating Market Reset
Ethereum fell below the $2,800 mark after a sharp and sudden decline, deepening panic across the market and reinforcing the feeling that bulls have lost control. The recent decline has sent investors into defensive mode, and some analysts are now openly discussing the possibility of a broader bear market. Selling pressure has intensified across spot and derivatives markets, and volatility continues to increase as traders struggle to identify reliable areas of support.
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Darkfost’s new CryptoQuant report highlights one of the most surprising developments. Ethereum’s public interest in Binance has been steadily collapsing for over three months. Open interest has now been halved after reaching a record high of $12.6 billion on August 22. Nearly $6.4 billion in derivatives positions were evaporated, causing ETH’s open interest to plummet 51% to $6.2 billion.
While this may seem like a huge contraction, Darkfost points out that open interest has only fallen below its previous high of $7.7 billion. This highlights how speculative and overextended the derivatives market will be in 2025, and suggests that Ethereum may be undergoing a much deeper structural reset than most expect.
Speculation unravels across exchanges as Ethereum enters deep reset phase.
Darkfost highlights that 2025 was the most speculative phase in Ethereum’s history, driven by aggressive leverage, rapid inflows, and a market structure that was far less robust and sustainable than the rally period. Binance’s open interest collapse is only part of the story.
The same pattern is unfolding across major derivatives platforms, revealing a broader structural unwinding rather than an exchange-specific phenomenon.
ETH open interest on Gate.io decreased from $5.2 billion to $3.5 billion. At Bybit, the decline was even more severe, plummeting from $6.1 billion to $2.3 billion. This synchronized contraction shows how aggressively speculative positions have been pushed out. Meanwhile, the ongoing correction caused the price of Ethereum to plummet from $4,830 to $2,800, a 43% plunge from its all-time high.
This widespread decline in leverage suggests that the market is experiencing a deeper reset than a typical correction. Investors are in no rush to re-enter positions, especially as liquidations continue to pile up across exchanges.
While the decline in open interest is weighing on near-term momentum and sentiment, Darkfost notes that this aggressive deleveraging could ultimately help rebuild healthier market fundamentals that could support a solid bottom for ETH.
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ETH loses key trend support as the 3-day structure turns completely bearish.
Ethereum’s 3-day chart shows a decisive break in the structure, with the price falling clearly below the 50 SMA, 100 SMA, and 200 SMA for the first time since late 2024. Rejection of the $3,600-$3,800 area triggered a strong downward impulse, sending ETH directly through all major moving averages and confirming a reversion to a higher-period downtrend. The current trading zone around $2,800 reflects a significant test of previous support, but momentum remains weak.
The 50 SMA has now crossed below the 100 SMA and both are starting to converge downwards towards the 200 SMA. This is a configuration that typically precedes ongoing modifications. Volume on the red candle increases, showing that sellers are still dominant and there is little evidence of aggressive dip buying. The most recent candle wick towards $2,700 highlights vulnerability rather than strength, suggesting buyers are hesitant to defend this level with any confidence.
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ETH is also forming a series of lower highs and lower lows, further confirming the bearish market structure. Once $2,750 is fully broken out, the next important areas of liquidity are located near $2,550 and $2,300, where previous consolidation occurred earlier in the cycle.
Featured image from ChatGPT, chart from TradingView.com
