Ethereum's price retreated more than 3% on Thursday, sliding below the $2,700 mark as traders locked in profits following a recent rally. The pullback came after the cryptocurrency faced resistance near $2,786, a level that has capped upside attempts in recent sessions.
Despite the daily chart still showing a broadly constructive structure, derivatives participation and on-chain activity have not kept pace with the price advance. This divergence paints a mixed picture for investors. On one hand, cautious leveraged positioning suggests traders lack strong conviction in the rally. On the other, it reduces the risk of excessive speculation and leaves room for open interest to expand if demand strengthens.
Open Interest Dips Below $35 Billion
Ethereum-denominated open interest has remained relatively stable since the short squeeze observed in late August. Open interest measures the total value of derivatives contracts that have not been closed or settled. Rising open interest can signal that traders are committing additional capital, while a decline may indicate position closures or liquidations.
Since establishing its late-June low, Ethereum has gained approximately 70%. Over the same period, dollar-denominated open interest increased around 60% to $34.8 billion. However, part of that increase is a mechanical result of ETH's rising value—even if the number of outstanding contracts remains unchanged, their dollar value climbs with the token's price.
The slower growth in open interest relative to price reinforces the view that the rally has not been primarily driven by an influx of leverage. This could be interpreted positively because spot-led advances may be more sustainable than moves fueled by borrowed capital. Yet it also shows that derivatives traders remain cautious despite ETH's strong recovery. If open interest begins increasing alongside a price breakout, it could provide additional momentum. Conversely, rapid growth in leveraged long positions would increase downside risk if ETH reverses.
Network Activity Fails to Match Price Performance
Network activity has also lagged behind Ethereum's price performance. The number of active addresses has remained broadly unchanged over the past three months, and total mainnet transaction count has declined during the same period. Historically, sustained bull markets have often coincided with rising address activity and transaction demand. Greater network use can reflect increasing participation in decentralized finance, stablecoin transfers, non-fungible tokens, and other applications. The present divergence raises questions about whether the price recovery is being supported by improving Ethereum fundamentals.
Liquidations Flush Longs
Thursday's decline triggered approximately $111.70 million in derivatives liquidations over 24 hours, according to CoinGlass. Long positions accounted for $97.6 million of the total, showing that traders expecting further gains absorbed most of the losses. A long liquidation occurs when the market falls enough that a leveraged bullish position no longer meets margin requirements, prompting the exchange to close the position automatically and creating additional selling pressure.
The imbalance indicates that some traders had increased bullish exposure near the recent highs despite the broader open-interest data remaining subdued. Liquidations can accelerate a decline in the short term, but once the most vulnerable leveraged positions are removed, the market may stabilize if spot buyers return around support.
Technical Forecast: Testing the $2,626 Support
Ethereum's daily chart retains a bullish bias as the price remains above several important exponential moving averages. Following the rejection at $2,786, the first significant support sits just above $2,626. This former horizontal level will be the immediate test for buyers seeking to preserve the short-term uptrend.
Below $2,626, a demand zone forms around the 20-day EMA at $2,549 and horizontal support near $2,544. The proximity of those levels could make the $2,544–$2,549 region a stronger defensive area. Further support is located around $2,431, followed by the 50-day EMA near $2,368. A sustained decline below those levels would significantly weaken the current bullish structure.
On the upside, ETH must first reclaim $2,786. A confirmed breakout could open a path toward the next resistance at $2,894, followed by the larger barrier around $3,177. The Relative Strength Index and Stochastic Oscillator are cooling after briefly entering overbought territory, suggesting momentum is easing. However, the reset could provide a healthier foundation for another advance if support holds.
For now, $2,626 is the key level. Defending it would keep Ethereum's recovery intact, while a breakdown could extend the correction toward the 20-day EMA.
This article is for informational purposes only and does not constitute financial advice.
