For most of the week, the Ethereum price has remained in a range-bound spell, putting in no significant movement outside of the $3,000 and $2,880 price boundaries. Amid rising speculations, an on-chain analysis has recently been put out, which provides an answer to the question.

Open Interest Across Exchanges Falls To $17 Billion

In their latest QuickTake post on CryptoQuant, analytics platform Arab Chain reveals that there has been a fall in active Ethereum derivatives contracts across major exchanges, as indicated by data from the Ethereum: Open Interest-All Exchanges, All Symbol metric. Typically, rising Open Interest (OI) across exchanges indicates that more traders are entering leveraged positions. On the other hand, falling OI reflects more exits of leveraged positions, and by extension, reduced aversion to risk.

In the Quicktake post, Arab Chain highlights that open interest across exchanges has dipped to about $16.9 billion, marking the lowest level reached since mid-December last year. This, in turn, reflects an overall reduction in risk appetite across the Ethereum derivatives market. Because there is less speculative activity, there are also reduced risks of liquidations. Hence, the Ethereum price stands a higher chance of consolidating.

 

What’s Happening On Binance?

While exchanges in general are recording significant pull-outs from the derivatives market, Binance has shown an outlier performance. Arab Chain highlights that the world’s largest exchange by trading volume has instead recorded about $7.5 billion in Open Interest. Interestingly, this reading slightly exceeds the December average range of $6.8–$7.4 billion. 

The divergence between the Open Interest values across all exchanges and that of Binance suggests that, while market participants are reducing their risk exposure, there is still liquidity in the derivatives market. Rather than a blatant exit, it has been repositioned toward the deeper and more liquid venue.

Arab Chain also explains that this behavior indicates a change in market operations from a higher-risk trading environment to one more price and risk efficient. In conclusion, the large traders are yet to make their exits but are merely reducing their exposure, while holding high-quality positions on Binance.

In addition, Ethereum’s proximity to the $3,000 price — especially as OI declines — shows that the market has been absorbing the deleveraging events while showing little selling pressure. Ultimately, Binance’s OI retaining levels above December’s support the idea that the market still has strong derivatives backing. Hence, the broader picture remains bullish. As of this writing, Ethereum trades at $2,958, reflecting a 0.33% growth since the past day, according to CoinMarketCap data.

Featured image from Pexels, chart from Tradingview.com

Ethereum is currently trading under pressure after failing to push above the $3,000 level again over the past 24 hours, a move that is reflecting trader sentiment across the derivatives markets. ETH is currently trading at $2,925, down 2.7% on the day, after moving within a 24-hour range capped at $3,012.99 and finding lows around $2,909.60, according to price data from CoinGecko. 

As price action weakens, a notable change has been developing, with on-chain data showing funding rates drifting toward negative territory and derivative positioning beginning to tilt more defensively.

Funding Rates Slide As Shorts Gain Ground

Ethereum’s failure to hold above $3,000 is an important psychological break for traders, especially after several failed attempts to hold above that level in January. Price action over the past week shows sellers maintaining control after ETH rejected around $3,360 on January 18, followed by a steady push lower toward the high-$2,900s. 

Although the pullback has so far been orderly above $2,900, this decline has come alongside fading momentum across the derivatives market.

One of the clearest signals for this can be seen in Ethereum’s OI-weighted funding rate, which has been steadily compressing and is now edging toward negative levels. At the time of writing, Ethereum’s OI-weighted is at 0.0008%, close to breaking into negative territory and far below readings around 0.009%, which it registered earlier in the month.

Funding rates turning negative typically indicate that short positions are paying longs, meaning stronger demand for downside exposure. Funding spikes that previously accompanied the price rebound in early January have faded, and the overall trend suggests bearish positioning is slowly gaining the upper hand.

Open Interest, Liquidations, And What’s Next

Although Ethereum’s price action fell below $3,000, derivatives traders have stayed in the market, keeping total open interest at high levels. Data from CoinGlass shows aggregate Ethereum open interest increasing by 0.68% in the past 24 hours, which shows that many traders are not exiting Ethereum entirely. At the time of writing, the total open interest is sitting at about 13.36 million ETH, equivalent to roughly $39.19 billion.

Looking across major exchanges, Binance has the largest share of ETH open interest, accounting for about $8.95 billion, but it is down by 0.8% in the past 24 hours. CME follows with approximately $5.73 billion in open interest, up by 3.72% in the past 24 hours. Gate comes next at around $4.01 billion, while MEXC comes in close at $3.51 billion worth of ETH open interest.

Over the past 24 hours, Ethereum liquidations totaled $64.34 million, with long positions ($52.52 million) accounting for the majority of losses.

A hold above $2,900 could allow Ethereum’s funding rates to normalize and open the door for another rebound attempt to $3,000. However, a continued fall in funding rates into negative territory could see bearish control pushing Ethereum below $2,900.

Ethereum is showing tentative signs of relief after weeks of downside pressure, but the recovery remains fragile. The price is currently struggling to push decisively above the $3,400 level, a zone that has repeatedly acted as resistance during recent attempts to rebound. While short-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 macro or liquidity conditions deteriorate again.

Adding complexity to the picture, derivatives data suggest a renewed buildup of risk. A report from Arab Chain highlights that Ethereum’s open interest on Binance has climbed to approximately $8.6 billion, its highest level since October 9.

This marks a notable shift after a prolonged period of contraction following the sharp liquidation event in October, when open interest collapsed from above $10 billion to below $7 billion in a matter of days. That episode flushed excessive leverage from the market and forced traders into a defensive stance.

The current rise in open interest signals that traders are gradually returning and rebuilding positions at lower price levels. However, this also increases the price’s sensitivity to sudden moves.

Ethereum Derivatives Activity Rebuilds 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 the CryptoQuant report by Arab Chain, the rise in open interest on Binance reflects renewed activity in the derivatives market and a clear return of traders’ appetite for leverage. This is a notable shift from the defensive posture seen after the October liquidation wave.

What stands out is that this increase in open interest is occurring while ETH trades near the $3,300–$3,400 area, well below its previous cycle highs. This suggests that traders are not chasing price at extremes, but instead building positions at relatively discounted levels. Historically, this type of positioning often reflects expectations of a medium-term upside move rather than short-term speculation.

At the same time, the fact that open interest has reached its highest level since October 9 without returning to prior overheated extremes points to a more balanced recovery. If this growth is driven by steady 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. A continued and rapid expansion in open interest while price stalls below $3,400 could increase vulnerability to sharp volatility. For Ethereum to sustain momentum, price and open interest must remain aligned, confirming that confidence is rebuilding rather than overstretching.

Price Faces Key Resistance Level

Ethereum price action on the daily chart shows a market attempting to recover, but still constrained by heavy structural resistance near the $3,400 region. After a sharp decline from the October highs, ETH established a local bottom below $2,900 and has since been forming higher lows, suggesting short-term stabilization rather than a confirmed trend reversal.

Price is currently trading near $3,300, where multiple technical factors converge. The descending 200-day moving average and prior horizontal support-turned-resistance are capping upside momentum. Each rally into this zone has met selling pressure, highlighting that this area remains a critical supply region. The inability to reclaim $3,400 decisively keeps the broader structure neutral-to-bearish.

On the downside, the rising short-term moving average and recent higher lows around $3,000–$3,050 provide initial support. As long as ETH holds above this range, the market maintains a constructive consolidation structure rather than resuming the prior impulsive downtrend. Volume has remained moderate during the recovery, indicating controlled participation rather than aggressive speculative buying.

ETH is compressing between rising short-term support and declining long-term resistance. This type of price behavior often precedes a directional move. A clean daily close above $3,400 would signal a shift in market control and open the door for a broader recovery.

Featured image from ChatGPT, chart from TradingView.com